CBD tower to be reimagined

IF the walls on the top floors at 108 St Georges Terrace could talk, they would tell tales of business decisions and deals that rippled globally.

The 51-storey building would relay stories of a notorious time and place in Western Australia’s business history, most infamously linked to Perth businessman Alan Bond, who developed the structure in the 1980s.

The building was Perth’s tallest at the time, with sweeping views of the city and across to Parliament House, where some of the politicians with whom Mr Bond had murky dealings worked.

Bond Corporation operated globally in the real estate, hospitality, media and resources spheres, with Mr Bond famous for his acquisition of Swan Brewing, of Channel 9 and for his America’s Cup win.

The building from which Mr Bond operated has taken on many iterations, but relics of its colourful past remain, including the luxury bathroom complete with a spa and gold fittings.

More than three decades have passed since the building, originally dubbed Bond Tower, was developed and its new owners are keen to give it a new identity.

Property fund Realside partnered with global real estate company Lendlease Group to purchase the asset for $340 million from Brookfield in December last year.

Realside, which has offices in Perth and Sydney, took a 33 per cent stake in the tower to Lendlease’s 67 per cent.

The property fund has assembled a management team for 108 St Georges Terrace, consisting of Realside Property partner Linda Rudd, Realside Property asset manager Rebecca Brammah and JLL general manager for 108 St Georges Terrace, Jessica Edmunds.

They will help reshape the building’s appearance, initially through a refurbishment of its lobby and end-of-trip facilities.

At least $6 million has been set aside for this task, with architecture firm Woods Bagot, which occupies the heritage-listed first floor of the building that once housed the Palace Hotel, appointed for the redesign.

The team will also look to rebrand the asset, often referred to as 108, R&I Tower, Bankwest Tower, South32 Tower and in the past, Bond Tower.

“We certainly want to try and identify and establish our own identity,” Ms Edmunds told Business News.

“It’s going to be one of the challenges because rebranding is not something that’s easy to do.”

While still deciding on a term, Ms Edmunds said “108 St Georges” was perfectly fine, though not very original.

Ms Rudd added that the building presented an ideal opportunity to reposition a property with a long and complex past.

“We can’t change history, but what we can do is put our own imprint on the building,” she said.

Given Brookfield spent about $110 million upgrading the asset after purchasing it for $170 million in 2015, the floors aren’t in need of much attention.

“There are some vacant floors at the moment that are ready to go apart from being fitted, so we’re going to roll out a few fit-outs [across] two full floors and one split floor,” Ms Brammah said.

At 88 per cent occupancy, with miner South32 anchoring the asset, the building presents a countercyclical opportunity for Realside at a time when few major commercial assets are changing hands.

“We were able to secure it for what we felt was a pretty attractive price [and] we felt that Perth certainly had a lot of data that backed it being a promising leasing market,” Ms Rudd told Business News.

Property Council of Australia data shows that Perth’s CBD office occupancy is at 80 per cent of pre-COVID levels, the highest in the nation.

Its latest office vacancy statistics put Perth at 15.6 per cent, which is the second highest nationally, but the WA capital was one of three Australian cities to show a decrease in its vacancy rates.

Positive net absorption ¬– meaning more office space is being occupied than vacated – has persisted in Perth for the past two years.

The 108 St Georges Terrace property, which has 38,332 square metres of net lettable area, reportedly sold for about $10 million less than the asking price, given the volatility impacting the market at the time.

“I think, last year, with the movement in interest rates, you did see a lot more uncertainty hit office markets and a lot of transactions either not proceed or get pulled,” Ms Rudd said.

“Perth, dissimilar to what we’ve seen in east coast markets, we actually felt was more attractive because you kind of didn’t have lockdown, hence everyone was back to work.

“One of the other overriding things we’ve picked up was that [Perth] being mining-backed, a lot of the mining groups said ‘we want everyone to be in the office’.”

The CBD office tower is Realside’s largest asset, and one of its eight office buildings nationally.

Founded in 2017 by Mark Vonic, Realside has grown to have assets under management of $1 billion.

The business is divided into Realside Property, run by Mark Vonic and Linda Rudd, Realside Capital, a debt origination business overseen by Sydney-based Alex Hone and a series of industrial development funds run by Julie Drago via Realside Ovest.

Ms Rudd said Lendlease Group seemed like the logical choice when it came to a joint-venture purchase.

“We’d spoken to Lendlease prior; there was another opportunity that had come up a year earlier and we knew that they had their Real Estate Partners 4 fund (REP4) that was more value-add opportunistic properties,” she said.

“The sales agent approached us on this asset, [and] that’s because Lendlease being east coast based … their strategy was to work with a local asset manager.

“When we walked through the asset together and then shared what we saw was the vision, we were aligned.”

Ms Rudd said Realside would execute the plan to reposition the building locally, with JLL, while regularly engaging with Lendlease.

As the property neared settlement, Lendlease’s head of private equity, Paul Snushall, described 108 St Georges as a “great acquisition for the REP4 portfolio” that the group was keen to enhance.

Realside and Lendlease bought 108 St Georges Terrace for $340 million.

While plans are under way to revamp the lobby and end-of-trip facilities, the landlords will consult tenants about the fate of the top floor, once home to Alan Bond’s penthouse.

“We will have a couple of tenant workshops [about] what tenants would like to see as part of services and amenities, and bookable third space is definitely something that keeps coming up in conversation,” Ms Edmonds said.

“We’d definitely be looking at improving on the offering in terms of bookable spaces.”

The building was purchased on a 7.7 per cent yield.