The ink is finally dry on GHD’s contract for at least 6,500sqm in QUBE Property Group’s office project at 999 Hay Street on the western fringe of the CBD.
The Perth office of the global engineering, design and environmental services group is the latest city tenant to anchor a new development in the CBD and fuel the mini-construction boom.
QUBE demolished the warehouse building on the 999 site earlier this year to demonstrate its commitment to the project and construction of what is the Subiaco-based developer’s biggest project to date got underway this week.
In the past six weeks building has also started on the first three office towers at Leighton Holdings’ Kings Square project in the City Link and Brookfield Office Properties has turned the sod on the second tower at Brookfield Place.
And there are still several significant leasing tenants actively seeking accommodation proposals, including Worley Parsons and accounting giant Ernst & Young, both of which are large enough to trigger a new project.
Ernst & Young is understood to be seriously considering Georgiou Capital’s Milligan Square development and Leighton’s Kings Square precinct.
QUBE worked directly with GHD to modify the design of the 999 Hay Street building to suit their needs, adding a rooftop boardroom as well as expanded end-of-trip facilities.
This tailor-made service reflects the competitive nature of the current office leasing market as well as the growing disparity between the rents in older style city office towers and new projects.
QUBE director James Collis said city tenants could currently move out of A or B grade office accommodation into a brand new development like 999 and save on their rent bill.
With city vacancy rates climbing, incentives on the rise and flat construction costs, QUBE managing director Mark Hector said it was a good time to be “cautiously developing new buildings.”
“There is no doubt rental rates are dropping and that’s providing an opportunity for people to move out of sub-standard buildings into brand new buildings at competitive or better rates than they have been previously paying,” Mr Hector said.
GHD’s departure from its Adelaide Tce headquarters will create a significant, new vacancy in a building with a complex ‘chalk-line strata’ ownership structure.
Only a handful of major leasing deals have been finalised for space in existing city office towers this year and the slowdown in mining activity has pushed the vacancy rate close to 7 per cent and 9.4 per cent in B-grade properties.