Lease concerns at Bishops See

Premier-elect Colin Barnett will no doubt make a number of key decisions during his first 100 days in office, but there's one that should be fairly high on the priority list - where his own department will be housed.

Earlier this year, the Carpenter government made an informal deal to lease three-quarters of the proposed 46,000 square metre office tower called Bishops See stage two, a joint venture between Brookfield Multiplex and Hawaiian.

Under the agreement, the Department of Premier and Cabinet and the Department of Treasury and Finance would be relocated to the new building from their existing quarters at Governor Stirling Tower (pictured).

However, the parties are yet to sign a binding contract, and in a problematic scenario for the incoming government, the DPC's existing lease of 25,477sqm expires in 2012.

If the DPC delays much longer in signing a new lease, construction of the Bishops See north tower - yet to commence - will not be possible within the required timeframe, leaving the department without offices.

The situation could also prove difficult for developers Brookfield Multiplex and Hawaiian, which would need to pre-lease at least 70 per cent of the building's space to justify construction, according to property sources.

The number of companies in the marketplace seeking to lease a tranche of space that size has dwindled, and the project would also face competition from other new office developments.

One scenario put to WA Business News is that the two departments could instead take the 36,000sqm of office space being constructed at 140 William Street, of which 22,000sqm has already been pre-committed by the state government on a 15-year lease.

In that event, the two proposed tenants for the William Street building - the Department for Planning and Infrastructure and the Department of Housing and Works - could be relocated more easily into other new buildings.

A spokesperson for the Department of Housing and Works, which is managing the DPC lease, said he did not know when a decision would be made but that it could be delayed as a result of the change of government.

The Department of Premier and Cabinet is currently paying about $350/sqm for its offices in Governor Stirling Tower, with suggestions it was negotiating its Bishops See lease for about $700/sqm.

The department originally had a formal request in the market for 30,000sqm of office space by September 2011.