Property firm Savills has warned of a significant office vacancy shortage in Perth's CBD after Chevron Australia announced it was leasing more than half of 256 St Georges Terrace.
Property firm Savills has warned of a significant office vacancy shortage in Perth's CBD after Chevron Australia announced it was leasing more than half of 256 St Georges Terrace.
Chevron will lease 12,300sq metres of the building which is next door to the mining company's headquarters at QV1.
Savills WA director of commercial leasing Graham Postma said the Chevron lease, combined with a number of other large new leasing deals that are close to being finalised, will result in a significant reduction in the Perth CBD office vacancy rate.
The latest PCA figures for July 2010 reported Perth's office vacancy rate at 9.9 per cent.
However, Savills' research indicates this rate has dropped to 7.5 per cent in October and forecasts a vacancy rate of less than 5 per cent is likely to be reached in 2011.
"We are already experiencing a significant reduction in the availability of larger contiguous tenancies, particularly at the western end of the CBD where most of the resource groups and their service providers want to be located," Mr Postma said.
"One of the most positive aspects of the recent deals is that many are as a result of tenant expansion and not just 'musical chairs' and are therefore resulting in strong positive absorption and reduction in overall vacancy."
See statement from Savills below:
In the largest new office leasing deal in the Perth CBD in 2010, Chevron Australia has leased more than 12,300 sq m at 256 St Georges Terrace, representing just over half the building.
256 St Georges Terrace is located next door to Chevron Australia's headquarters at QV1 and offered large floor plates of over 3,000 sq m each - some of the largest available in the Perth CBD.
The lease was negotiated by Graham Postma, Savills WA Director of Commercial Leasing, on behalf of the building owner Evergreen Realty, with Mark Smith of Grant Samuel acting on behalf of Chevron Australia.
Savills' Mr Postma said the Chevron lease, combined with a number of other large new leasing deals that are close to being finalised, will result in a significant reduction in the Perth CBD office vacancy rate.
The latest PCA figures for July 2010 reported Perth's office vacancy rate at 9.9%. However, Savills' research indicates this rate has dropped to 7.5% in October and forecasts a vacancy rate of less than 5% is likely to be reached in the Perth CBD in 2011.
"We are already experiencing a significant reduction in the availability of larger contiguous tenancies, particularly at the western end of the CBD where most of the resource groups and their service providers want to be located," Mr Postma said.
"One of the most positive aspects of the recent deals is that many are as a result of tenant expansion and not just 'musical chairs' and are therefore resulting in strong positive absorption and reduction in overall vacancy."
According to Savills' latest Prime Full Floor Availability figures, a tenant seeking 5,000 sq m of contiguous Premium or A Grade office space in the Perth CBD currently has only five options to consider, with only 2 of these being available immediately, and the others becoming available upon the relocation of BankWest to Raine Square and BHP to their new head quarters.
Helen Swanson, Savills WA Head of Research, said there has been a big turnaround in tenant confidence in the Perth CBD with net absorption at a record high of 36,555 sq m for the six months to June 30, 2010.
She said the positive outlook for the market is reinforced by limited supply and strong economic forecasts for the next five years.
"Net absorption should continue to record strong results on the back of the resurgence of the commodity sector and solid market fundamentals, including white collar employment growth," Ms Swanson said.
Savills' Mr Postma said the latest round of new Perth CBD office developments, including Bishop See, Alluvion, 140 William Street, 100 St Georges Terrace and Dynons Plaza, were all but fully leased upon completion.
He said while many in the market were concerned about the impact of back fill vacancies following pre-committed tenant relocations, the majority of such vacancies have now been fully or significantly committed.
"Chevron leased all of the NAB vacancy left at London House and, with their latest commitment to 256 St Georges Terrace, the majority of the space vacated by KBR and Apache Energy, that had both relocated to 100 St Georges Terrace. Only one floor of the old KPMG space is left at Central Park and a large portion of the vacancy within 251 St Georges Terrace have now been leased to AGC and RCR Tomlinson," Mr Postma said.
"One of the floors vacated by Macquarie Bank, Level 28 in Allendale Square, has been leased by Hess Corporation, which has doubled their commitment to the building. The remaining 2 high-rise floors, which have been fully refurbished and boast some of the best views in the city, are currently receiving significant interest."
