14/02/2006 - 21:00

Hamersley to anchor in CBD

14/02/2006 - 21:00

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Rio Tinto subsidiary Hamersley Iron is understood to be in the final stages of negotiation with privately owned Hawaiian Management Group and Multiplex to become the anchor tenant for the proposed Bishops See development.

Rio Tinto subsidiary Hamersley Iron is understood to be in the final stages of negotiation with privately owned Hawaiian Management Group and Multiplex to become the anchor tenant for the proposed Bishops See development.

The joint venture partners lodged for development approval for two office towers on the site late last year.

Hawaiian general manager of property development Stuart Duplock told WA Business News the proposal was still progressing through Perth City Council and the Heritage Council.

Hamersley is believed to be close to signing on to stage one of the development, which consists of a nine-level, 18,000 square metre building.

Stage two is a 24-level building with 46,000sq m of office space.

Mr Duplock declined to comment on any current tenant negotiations, but said Hawaiian and Multiplex wanted separate pre-commitments on each of the towers before going ahead with construction.

“The idea is to get a sizable pre-commitment to the first tower and then, hopefully, given the state of the market, we will have an increased chance of success on the second,” Mr Duplock said.

Hamersley is actively in the market seeking between 12,000 and 18,000sq m of floor space.

There are currently four private major development proposals for Perth’s CBD, none of which has yet announced anchor tenants. They are: Luke Saraceni with Raine Square; Multiplex and the Griffin Group with 125 St Georges Terrace; Peter Laurence’s Pivot Group with Century City at 100 St Georges Terrace; and Hawaiian and Multiplex for the Bishop’s See precinct, at 225 St Georges Terrace.

The state government is also putting the site above the yet-to-be-constructed Wellington Street train station up for sale. Last year, Leighton Holdings Ltd, Grocon, Lend Lease Corporation Ltd, and Multiplex Group were announced as developers short-listed for the 0.88-hectare site.

As a sweetener for the sale, the government has pre-committed to a 22,000sq m, 15-year lease on the site, essentially guaranteeing the go-ahead for construction.

LandCorp is expected to eventually sell the site for around $25 million, and it is understood the four short-listed developers will be asked for their specific proposals for the site later this month.

Perth CBD vacancy rates have nose-dived to record lows during the past 12 months, from 13.3 per cent in January last year to 5.8 per cent in January 2005, making it the best-performing office leasing market in the country.

Almost all of the take-up in office space is due to organic growth of existing tenants, who are expanding their businesses in Perth’s prosperous economic conditions.

Almost 100,000sq m has been taken up in Perth in the past year, 85,000sq m above the yearly average of 15,000sq m.

And while Perth’s office market is now the national standout, the shortage of supply coming online in the next two years is a concern to industry, with any major new office building needing a construction period of at least two years.

This means that, until a new building is complete, Perth’s vacancy rates will tighten around tenants as rents increase and incentives all but disappear.

Industry analysts have said this may lead to increased development in the peripheral suburban office market, as well as tenants reconfiguring their existing space in order to accommodate growing staff numbers.

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