04/11/2003 - 21:00

Clough move intrigue

04/11/2003 - 21:00

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THE recent announcement by Clough Limited of its plans to consolidate its operations and search for 12,000 square metres of office space is heartening news for Perth’s commercial property development sector.

THE recent announcement by Clough Limited of its plans to consolidate its operations and search for 12,000 square metres of office space is heartening news for Perth’s commercial property development sector.

But some industry pundits have tipped that the engineering and construction group will select an existing building for its new tenancy, with 1 Adelaide Terrace considered the most likely candidate.

With Woodside Petroleum Ltd to relocate to its new premises at 240 St Georges Terrace early next year, 1 Adelaide Terrace is considered one of the few existing buildings in the Perth CBD that currently could cater for Clough’s space requirements.

The group plans to contract from 11,000sq m of core space to 9,000sq m and cut down its 10,000sq m of project space to 3,000sq m.

While Clough’s relocation date in early 2007 is not ideal for Baulderstone Hornibrook, which agreed to take on Woodside Petroleum’s lease until it expires in 2008 as part of its contract to build Woodside’s new headquarters, other options were available, according to Jones Lang Lasalle leasing manager Nick Van Helden.

As leasing agent for 1 Adelaide Terrace, Mr Van Helden said the building met Clough’s leasing brief and a proposal would be drafted based on Clough’s requirements, which include an earlier occupation date.

Mr Van Helden said for less than $200/sq m, 1 Adelaide Terrace offered 23,000sq m of contiguous space, was fully partitioned, featured river views and numerous other services.

He said that, historically, engineering firms preferred large floor plates, open-plan fit-outs, value-for-money accommodation and did not have to be in the central CBD area, as illustrated by engineering firm Hatch’s relocation to Stirling Street.

Clough Limited currently pays around $150/sq m for its 4,000sq m headquarters at 251 St Georges Terrace and industry sources are speculating whether the firm would be willing to pay the current market rate for a new CBD office building of around $365/sq m.

A number of potential office tower sites around the Perth CBD have failed get to off the ground over the past year due to existing office building owners’ moves to provide attractive lease renewals in order to retain major tenants.

One industry source believes Clough’s space requirements had the potential to start construction plans for a new office tower, as there were few existing buildings that could accommodate a 12,000sq m tenancy.

He said Baulderstone Hornibrook would be “watching a lot of money go out the door” if it waited four years for Clough to occupy 1 Adelaide Terrace. And with the lease expiring in 2008, there would be little benefit, he said.

Multiplex’s Westralia Square redevelopment is considered the most likely development to attract pre-commitment, due to the low purchase price of the land, which allows Multiplex to offer new building lease rates in the low $300/sq m.

Appointed tenant advocate, Grant Samuel Property director Matthew McNeilly, said it was an opportune time for a tenant of Clough’s size to be considering its long-term accommodation needs.

“Incentives are currently high, vacancy rates are on the increase and there is an abundance of CBD sites available to consider for a pre-commitment,” he said.

Mr McNeilly said while Clough was likely to act as a catalyst for a new development, all options would be considered and Perth’s existing stock may be able to satisfy the requirement.

“Our view is that this inconsistency, rents at below viable levels and a general lack of market depth, have all been contributing factors to the failure to get new buildings off the ground in Perth,” he said.

“We don’t know of any other tenants that are likely to anchor the proposed new developments, so we expect the Clough covenant to be in demand.”

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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