Leasing deal to underpin Treasury revamp

THE state government’s plans to consolidate its office space and create a justice precinct at St Georges Terrace will underpin the redevelopment of the heritage-listed Old Treasury Building into a boutique hotel, according to Premier Colin Barnett.

Mr Barnett has announced a $584 million redevelopment of the old Treasury site, including a 46-suite luxury hotel, operated by international chain Aman Resorts, and a 35-storey office tower.

The plan calls for the Law Chambers on Hay Street to be demolished to make way for the tower, the creation of a piazza-style public square between St Georges Cathedral and the Old Treasury Building, and refurbishment of the Public Trustees building, which will deliver 8,000 square metres of office space.

Mr Barnett said the state government had agreed to hand over the entire site to developers Mirvac and Cbus Property on a 99-year lease agreement, and will lease back 37,000sqm of office space in the tower and the Public Trustees building, which will become the centre of the justice and legal operations of the government.

Mr Barnett said the 25-year leaseback arrangement was crucial in that it would financially underpin the development.

“The lease on the central 35-storey tower will be a 25-year lease, and the state is going to pay a lease rental which is above the market rate,” he said.

“The state has negotiated to pay a premium rental, of an additional $180 per square metre.

“Over the 25-year lease period, that will equate to a contribution of $102 million.

The agreement does not require any up-front payment by the government, and ensures Perth upholds its heritage values, Mr Barnett said.

“The reason the government is contributing effectively $102 million to this site are several,” he said.

“First, it is a state-owned heritage property. If the government were to redevelop the Treasury buildings as government buildings and just do that alone, it would cost close to

$150 million.

“It also gives the state an ability to integrate the courts and the attorney general’s department into a legal precinct, and that will save money in the long term.

“$102 million is a significant contribution by the state government, but it is over a 25-year period and I believe that, for Western Australia, it is very good value for money.”

The leasing deal and redevelopment is the result of 18 months of negotiations between the state government and its relevant departments, the Anglican Diocese of Perth, and the Mirvac/Cbus Properties consortium.

The Old Treasury Building has been vacant since 1996, and since then there have been a number of proposals to redevelop the site.

Former premier Richard Court sought private sector interest in the Old Treasury Building when the government first vacated, but nothing came to fruition.

In 2005, the Alan Carpenter-led Labor government explored housing the office of the Premier and Cabinet in the building, but that proposal also did not succeed.

In 2007 the current state government sought expressions of interest to redevelop the site. The Mirvac/Cbus consortiumthat was successful in negotiations, and it was nominated as preferred proponent for the redevelopment in February 2009.