03/03/2011 - 00:00

CBD tight despite moves

03/03/2011 - 00:00

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THE state government has announced it is moving most of its offices out of the CBD, while accounting firm PwC will also shift its base; but the moves are not expected to make a dent in Perth’s shrinking office vacancy rate.

CBD tight despite moves

THE state government has announced it is moving most of its offices out of the CBD, while accounting firm PwC will also shift its base; but the moves are not expected to make a dent in Perth’s shrinking office vacancy rate.

PwC announced last week it had signed a 10-year agreement to take up 8,500 square metres at City Square, vacating 5,000sqm at QV1, while the state government will vacate the Governor Stirling Tower by July 2012.

About 25 agencies will be relocating prior to the expiry of the lease at Governor Stirling Tower, including the Department of Treasury and Finance’s treasury division and the Economic Regulation Authority.

About 600 of the 1,150 government employees currently located at Governor Stirling Tower will be moved to Dumas House in West Perth, with the balance moving into one40william or Albert Facey House.

Ministerial and central government departments, including the premier’s office, will relocate to Hale House in West Perth after it is refurbished.

Colliers International director of office leasing, David Cresp, said the moves were occurring at a time when supply was badly needed in the CBD office market.

“The biggest effect the government will have on the core CBD is at 197 St Georges Terrace (Governor Stirling Tower),” Mr Cresp said.

“That building will be refurbished and brought back into supply in 2012-13, and that’s going to see space that will be in high demand in a very central location.

“It is likely to be leased out well before the space actually becomes physically vacant again, and we expect it would be largely pre-committed.”

As of December 31 last year, the CBD office vacancy rate was 9.5 per cent, while West Perth’s came in at 5.2 per cent, according to the Property Council of Australia.

Mr Cresp said the core-CBD market vacancy rate was as low as 6.2 per cent and demand was currently so high that PwC’s move was not likely to create any backfill space.

“Other tenants in QV1 will take that space up,” he said.

“It’s back to being more of a landlord’s market, with larger tenants particularly looking for space in the CBD finding a limited number of options.

“Larger tenants within buildings are going to be looking for ways to expand, and the best option for them is to expand within their own building.

“That means that smaller and mid-size companies that have got lease expiries and don’t have options after that time, shouldn’t just assume that they’ll be able to renegotiate, they need to start entering those negotiations with the landlord sooner rather than later and also have a look around to see what other options are out there for them.”

WA Business News understands that the 5,000sqm PwC will vacate at QV1 will be taken up by Chevron, which has increased its CBD footprint by 31,500sqm over the past 12 months.

 

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