Property investment fund Quintessential Equity is sharpening its focus on Perth office assets as it prepares to act on a mandate to invest $300 million across the country in the next 12 months.
Quintessential Equity managing director Shane Quinn said the Melbourne-headquartered group recognised significant opportunities to add Western Australian buildings to its national portfolio, which currently includes 8 St Georges Terrace as its sole Perth asset.
Mr Quinn said Quintessential Equity would seek to identify lower-grade buildings in need of refurbishment and execute the company’s strategy of regeneration and re-leasing.
Property Council of Australia office vacancies data from February showed a glut of vacant space among older stock in Perth, with 21 per cent of C-grade buildings empty, and 16 per cent of D-grade assets without a tenant.
“The premium grade market is very tight, vacancies are going to drop and incentives are going to fall in that space,” Mr Quinn told Business News.
“You will likely see effective net rental growth in that space because the majority of those buildings have reset themselves and there is limited vacancy."
Mr Quinn said a comprehensive refurbishment program at 8 St Georges Terrace, which was bought for $9.25 million as a vacant building in 2018, was indicative of Quintessential Equity’s acquire and redevelop strategy.
“The key to what we are offering the market is not only a regenerated building but a seamless move for tenants into the building with turnkey fitouts,” he said.
“We understand that smaller tenants don’t have the lead times that some of the larger corporates have and we want to be a partner to make it a seamless move from their current accommodation into new-spec fitout that’s been created so they can see it, touch it and feel it.”
Mr Quinn said practical completion of the refurbishment had been achieved in recent weeks, with commercial agents CBRE and JLL appointed to undertake a joint leasing campaign.
“We currently have more than 25 per cent of the building in close negotiations for final heads of agreement,” he said.
“It’s been very well taken up and we are going to be very proactive over the course of the year to see it 100 per cent leased, that’s our goal.”
Mr Quinn said the multi-million dollar refurbishment was also indicative of what was required for landlords of older office buildings to compete against newer office stock.
At 4,856 square metres, 8 St Georges Terrace was built in 1970 and had been anchor-tenanted by RSM from 1989 until the accounting group shifted to Exchange Tower in 2016.
“I don’t think a building will lease at any price if it is a C-grade building,” Mr Quinn said.
“It is just not offering the accommodation needs of a modern tenant.
“Perth is a very dynamic market where if you’re not leading the charge with amenity and comfort conditions with buildings, you’re not going to win the race for the tenant.
“There are a number of buildings here that are just going to languish, and there are a number of them that are going to flourish.
“We want 8 St Georges to be at the forefront of the buildings that are going to flourish and we want to offer tenants the amenity that they want and need to retain and attract the best possible staff.”
