18/07/2014 - 12:37

Major office projects win DAP tick

18/07/2014 - 12:37

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The City of Perth development assessment panel has approved two major office projects in the CBD – one at the Melbourne Hotel on Milligan Street and the other at 374-396 Murray Street – but it is unclear whether market demand will support the proposals.

Major office projects win DAP tick

The City of Perth development assessment panel has approved two major office projects in the CBD – one at the Melbourne Hotel on Milligan Street and the other at 374-396 Murray Street – but it is unclear whether market demand will support the proposals.  

The DAP last night gave the green light to a $40 million, 20-storey office tower and a 67-room hotel plan at the Melbourne Hotel, put forward by The Buchan Group.

Under the proposal, the recent western and northern additions to the Melbourne Hotel building, which were built in 1997, would be demolished to build a seven-storey hotel.

The office tower would be built to the west of the hotel.

An artist's impression of the Melbourne Hotel proposal.

Meanwhile, the DAP also approved a $130 million, two-tower mixed-use development at 374-396 Murray Street, a site sold by Westbridge Property Group to Singapore’s Fragrance Group last week for $40 million.

The proposal consists of a 14-level office tower and a 32-storey apartment building, which would provide up to 286 dwellings.

Also this week, the City of Perth received a pair of development applications for mixed-use projects, collectively worth $200 million.

At 220-224 Pier Street, an application was received to develop a $145 million, two-storey development comprising a 29-level hotel and a 16-level office tower.

The other application was for a $55 million, 21-storey apartment project at 108 Stirling Street.

The City of Perth also received an application to develop a $44 million, eight-storey apartment tower at 10 Adelaide Terrace, part of Frasers Properties' Queens Riverside project, and a $10 million, five-level apartment project at 36 Bronte Street in East Perth.

However, it is unclear whether the appetite of potential commercial tenants would be enough to underpin the office proposals.

Business News’ comprehensive analysis of the sector is due to be released on Monday, with the CBD office vacancy rate tipped to come in around 13 per cent when the Property Council releases its figures next month.

That rate is expected to increase to around 17 per cent as a record wave of office projects, comprising about 170,000 square metres of space, hit the market in 2015.

The issue for developers pitching future proposals is that most of the major tenants have their office needs catered for, either in existing buildings or new buildings under construction.

Burgess Rawson associate director Clive Norman said the situation created a bleak outlook for office developers.

“It’s quite simple really - don’t build an office building,” Mr Norman told Business News.

“There is not the demand and surplus stock is available.”

For more analysis of the sector, watch out for Business News’ print edition on Monday, or tune in to the Business News Background Podcast.

 

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