31/05/2013 - 16:02

Brookfield Place II set to proceed

31/05/2013 - 16:02

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Construction of Perth's next big office development could start within weeks as investment group Brookfield strives to meet its 2015 deadline for a second tower at Brookfield Place.

It's believed the Canadian group has locked down accounting firm Deloitte and legal operation Corrs Chambers Westgarth to anchor the building, and negotiations with a third party for space in the high rise part of the tower are said to be at an advanced stage.

Brookfield has proposed a 16-level tower on the southern portion of Brookfield Place, which would support about 30,000sqm of office accommodation.

There are currently a number of blue-chip tenants examining their options in the city, including Santos and US energy heavyweight Chevron, which has consistently been linked with a new tower at the Elizabeth Quay site.

The Adelaide-headquartered Santos has doubled the size of its Perth office since 2009, reflecting growth in its operations in Western Australia.

It has expanded its lease in Wesfarmers House from one to two floors, as well as leasing a floor of the neighbouring office tower at 30 The Esplanade.

Accounting heavyweight Ernst & Young is also close to the end of its lease agreement at 11 Mounts Bay Road, which is also owned by Brookfield.

Ernst & Young has naming rights for its office, adjacent to the Perth Convention and Exhibition Centre, and while it's not an obvious contender for the high-rise portion of Brookfield II, competitor PwC relocated to Brookfield Place last year.

Analysts suggest there is a total of about 20,000sqm of unleased office space in Brookfield II once the accommodation needs of Deloitte and Corrs have been accounted for.

Both of these businesses are currently housed in Woodside Plaza and their departure would leave property owner DEXUS with a large hole to fill.

Brookfield II is blue-chip office space and would only appeal to premium office users, such as the top-flight professional services businesses and global mining operations, like BHP Billiton.

It was widely assumed last year that Shell would anchor Brookfield II but it surprised the market by opting for Kings Square.

Despite this setback the timing is right to push the button on the second tower, according to one senior leasing executive, who was confident construction would pique interest in the building.
"They have this balance, if they don't start soon they will lose the two pre-commitments they have got, because there will be (lease expiry) timeframes involved there," he said.

"And if they can't go without getting a third pre-commitment ... it's a very tough thing to do, lining up two is extremely difficult, lining up three has proved historically impossible in Perth.

"If they are going to do it they should do it in the current market and probably what we will see is a few more of these firms come out and get these incentives while they are on the table."

Brookfield's construction arm Brookfield Multiplex is likely to take on the building contract for Brookfield II just as its biggest contract, the Fiona Stanley Hospital, nears completion.

As reported exclusively in Business News, Brookfield Multiplex is also in the running for the first two towers at the state government's Elizabeth Quay project, in partnership with architects Woods Bagot and developer Frasers Property.

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