$100m of CBD sales in train

Four CBD office buildings worth more than $100 million are believed to be under contract for sale, including the prominent Wesfarmers and Clough buildings.

The Wesfarmers building is understood to be under contract for more than $45 million, representing a big capital gain for its owner, Cape Bouvard, which bought it for $35.9 million in 2001.

The Clough building is also understood to be under contract, for more than $33 million, again delivering a healthy profit for its owner, the National Australia Bank Super Fund, which bought the site for $21.3 million.

Also believed to be under contract is 251 Adelaide Terrace, for $16 million, from owners Haryne, linked to Singaporean interests, and 10 William Street for $8.5 million from owners Westpac.

WA Business News understands that local and interstate purchasers have acted quickly to buy the buildings, except for William Street which involves a syndicate of three American investors.

Perth’s office leasing market has emerged during the past 12 months as the nation’s leader, with the previously sluggish office sales market springing to life.

Office space is tightening rapidly in Perth with industry analysts agreeing that Perth needs a new office tower, if not two.

And, as anchor tenants take their time signing up, the sector increasingly becomes an owners’ market, a fact not lost on local and interstate investors.

Even the large listed property trusts have subtly indicated they will be looking at Perth a lot more closely (see Property, page 14).

Property Council figures show that a record 51,000 square metres of office space was absorbed over the six months to July 2005.

Perth posted the strongest vacancy decrease of any Australian CBD office market over the same period, dropping by a third, from 13.4 per cent to 9.5 per cent.

This number is expected to fall further over the next six-month period as tenants push out their space, while developers scramble to secure anchor tenants for proposed office developments.

Industry players say that rents have skyrocketed over the past six-month period, with premium buildings securing leases at more than $400 per square metre.

And, with a recent Property Council survey showing that 47 per cent of CBD tenants expect an increase in staff levels over the next year, Perth’s office leasing market will become extremely tight for the next two to three years until a new office gets out of the ground.