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Growth driving tenancy trend

THE heat is on for Perth CBD building owners to hold on to their tenants as a range of city firms look to relocate.

Leading the charge to find new premises are law and accounting firms.

Both Corrs Chambers Westgarth and Deacons are expanding and both are scouting the market for alternative office space.

According to industry sources, accounting firm BDO is looking to expand and upgrade to alternative building premises.

Corrs Chambers Westgarth, currently located on 150 St Georges Terrace, is searching for between 2500 and 2800sq m of premium of A-grade office space in the CBD.

Nick Masters and Associates director Nick Masters said the firm was tight for space and was looking to upgrade out of its B-grade building location.

Mr Masters said that, unlike other clients that were down-sizing or ‘down renting’, the legal and accounting sector had shown strong growth and local firms would most probably grow or maintain the status quo.

“The Corrs Chamber Westgarth shift is a good move for the market, they require additional space so it will be positive net absorption,” he said.

The firm will formulate a short-list of A-grade and premium buildings in the next few months and will look to move in the next one to two years.

Mr Masters said organisations’ decision to relocate was not incentive driven. Rather, re-location was driven by the need to expand or contract, upgrade or downgrade, or to change geo-graphic location.

Deacons Perth office chairman Lee Verios said the firm was expanding from 2000 square metres to 2500 square metres.

“We are presently reviewing the whole market and looking at all the buildings,” he said.

According to industry sources, other organisations exploring alternative premises are RAC, Westpac, Western QBE, Iluka Resources Limited, Sunday Times, Bureau of Statistics and Department of Veteran Affairs.

Property Resource Consultancy managing director Charles Kellett said it was going to be a good year for tenants but a competitive one for building owners.

“Landlords with tenants in buildings will have to aggressively renegotiate or tenants will walk,” he said.

Mr Kellett said that, if other buildings were offering sufficient incentives, it made financial sense for tenants to move. 

Incentives currently being offered for CBD office space are between 15 and 20 per cent and mainly comprise of fit-out contributions and rent-free periods.

“Older smaller buildings will struggle to compete,” Mr Kellett said. “Though the C-grade will attract tenants who need cheaper rents, older buildings do not have the technological edge, many are well managed and furbished.”

Despite the number of tenants considering relocation in the search for more office space, Mr Kellett said new construction to accommodate the need was unlikely.

FPD Savills divisional director of commercial leasing Graham Postma said the development of a new building was a wild card in the market.

“Really, KPMG is the only tenant that could kick-start a new development,” he said.

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