As 2009 comes to a close, major construction companies are exploring new opportunities in the public sector to offset the expected downturn in commercial building.
AS 2009 dawned, Perth was in the midst of a commercial construction boom that continued despite the global downturn, made evident by a plethora of cranes casting shadows across the CBD skyline.
But as 2010 progresses, the pattern will be reversed as local construction falls away and the cranes disappear, just as the wider economy starts to pick up.
A host of new developments were completed during the past twelve months, particularly in Perth’s CBD area.
Retail property in the city underwent a significant transformation in 2009, with the opening of upmarket shopping precincts, the Wesley Quarter and enex100.
Major suburban centre developments included a $160 million refurbishment of the Rockingham City shopping centre and the opening of stage one of the Claremont Quarter.
Significant mixed-use commercial projects nearing completion include One40William Street and Raine Square while the Alluvion office tower on St Georges Terrace is also progressing.
But with no new projects in line to replace those nearing completion, major construction companies have already shifted their focus away from the private sector, and are actively seeking public sector works and government contracts.
National construction giant Brookfield Multiplex announced in March it had been appointed as the managing contractor for design and construction of stage one of the $1.76 billion Fiona Stanley Hospital at Murdoch.
The $220 million contract will see Brookfield Multiplex progress the hospital design to the point where major subcontracts for the construction works would be tendered.
Major construction companies also tendered for work arising from the federal government-funded school building programs.
In July, national construction heavyweight John Holland announced it had won 40 per cent of the new school tenders, comprising 88 contracts valued at $140 million.
Belmont-based Pindan Constructions was awarded $37.6 million in tenders, while Claremont-based Arccon Design and Construction won $27.2 million worth of work.
Public works tenders in 2010 are likely to include the state government’s recently unveiled waterfront plans, and work is also expected to begin on the long-awaited Northbridge Link early next year.
Premier Colin Barnett said in a statement released last week there was significant work to be done at the waterfront on road realignment, drainage and dredging, but preliminary works would begin as soon as possible, with major construction commencing in 2012.
For the Northbridge Link, the first land in the project was released to the market in November, and forward works to sink the rail line will commence early in 2010.
The centrepiece of the final Link plans, announced last month, is a public square about twice the size of Forrest Place and almost one-third of the entire 13.5 hectare area will be dedicated to public space.
Planning Minister John Day was also busy in 2009, releasing proposals to streamline the planning process through the introduction of ‘development assessment panels’, and also announcing clear strategy directions for industrial lands and urban infill.
The Industrial Lands Strategy provided a blueprint of industrial development for the next 20 years, and identified 40 sites with the potential for industrial land use.
The draft urban planning framework, Directions 2031, which Mr Day released in April, abolished shopping centre floor space limits and provided guidelines for achieving better outcomes from mixed-use developments with its Activity Centres Policy.
Directions 2031, which replaced the former Labor government’s Network City policy, recommended a 47 per cent urban infill policy for new housing developments, a lower figure than Labor had targeted.
Meanwhile, the effects of the global financial crisis were felt harshly on sales in 2009, as Landgate records showed 510 commercial sales in 2008/09, down from 797 in 2007/08 and 941 in 2006/07.
The aggregate value of all sales at $370 million was well down on the previous year’s total of $736 million; a fall of nearly 50 per cent.
Major transactions included the sale of the ATO building on Francis Street for $95 million in April, the sale of the Holiday Inn City Centre for $44 million in October and Charter Hall’s sale of its 50 per cent stake in Alluvion for $95 million in November.
In August, ING Retail Property Fund Australia was expected to pick a suitor for the sale of its $450 million Lakeside Joondalup shopping centre.
Despite narrowing the field to Colonial First State Global Asset Management, QIC Real Estate and a consortium of Lend Lease’s Australian Prime Property Fund and the Future Fund, ING was not able to finalise the sale.
Industrial property sales volumes in WA also declined during 2008-09.
Landgate figures showed there were 649 sales on developed industrial sites in 2008/09, which was 32 per cent below the 948 recorded in 2007/08 and 43 per cent below the 1133 properties sold in 2006/07.This was matched by the 31 per cent fall in the total value of $625.6 million of all sales in 2008/09 compared to 2007/08's total of $911.6 million.
