The sale campaign for a half share in the blue chip QV1 building has sparked speculation over the potential for a significant new Perth office tower.
The sale campaign for a half share in the blue chip QV1 building has sparked speculation over the potential for a significant new Perth office tower because the 43-storey property’s biggest tenant, US energy giant Chevron Australia, has the scale to anchor a new skyscraper.
In late May the Queensland Investment Corporation was touted as front runner in the sale negotiations with QV1 half share owner SAS Trustee Corporation but in a statement yesterday QIC would not make any comment.
The renewed focus on the office tower and its tenant list has inevitably raised questions over Chevron’s long-term plans for its office accommodation in Perth.
It is the biggest tenant in the tower and as such its lease is likely to be a significant issue for any investor running the ruler over QV1.
Dexus Property Group, which has a mandate to manage QV1 on behalf of SAS is playing its cards very close to its chest, revealing only that “an off-market campaign for a 50 per cent interest in QV1 is continuing.”
However it’s understood the agent, CB Richard Ellis is engaged in discussions with an interested party and these are likely to run for at least another month.
Chevron is one of the biggest tenants in the Perth market along with fellow mining giants BHP Billiton and Rio Tinto. It leases more than 30 per cent of QV1 and according to Dexus this agreement runs until late 2016.
In addition to QV1, the 13-storey Dynons Plaza on Hay Street is fully leased to Chevron and it also has more than 12,000sqm at 256 St Georges Terrace, the building directly west of QV1.
Dexus said it was working closely with Chevron to accommodate its needs from 2017 but the energy behemoth is also working with property consultant and tenant representative, Grant Samuel.
Grant Samuel Perth director Mark Smith wound not comment on the nature of this work or whether Chevron was considering a move to its own tower but in the face of a newly-invigorated leasing sector and with city landlords keen to capitalise on the tightening vacancy rate Chevron appears to be examining its options.
There are only a couple of city sites that could support a major, new office tower, the foreshore development site, the former Emu Brewery land at the west end of the city and the City Link project between the CBD and Northbridge.
Neither the second stage of Brookfield’s City Square development nor Bishops See stage two would be big enough for Chevron, which currently has about 70,000sqm of office space in the CBD.
One property analyst suggested Chevron would look for a site where they could lease or own at least 60,000sqm.
Chevron owns a number of its office properties around the world and in late June Chevron Corp paid $340 million for a 50-storey office tower in Houston.
Most property analysts believe the city foreshore is the most likely site for Perth’s next office tower but it’s Perth’s rapidly diminishing vacancy rate and rising rents that will underpin any new project.
“At some stage I believe Chevron is thinking they will build their own building in Perth,” one property analyst said, “but they are still trying to work out how much space they need here.”
Brookfield lodged the development application for the second tower on the City Square site last week. The developer did not unveil any tenants for the new, 30,000sqm tower but Brookfield Office Properties chief executive Brian Kingston said he was confident in the ongoing strength and growth of the Perth office sector.
CBRE has forecast the CBD vacancy rate will fall to 6.5 per cent by this month, down from 9.5 per cent in January.
This decline is expected to continue until the middle of next year when the completion of a number of new projects, including City Square and Raine Square will deliver some backfill space.
Chevron would not make any comment on its property plans.
