“REPORTS of my death have been greatly exaggerated” is a classic line that could be applied to building construction opportunities in the office and education markets.
“REPORTS of my death have been greatly exaggerated” is a classic line that could be applied to building construction opportunities in the office and education markets.
The number of cranes towering above the CBD skyline, always considered a good barometer of building activity, has been steadily declining over the past year or so, leaving pundits wondering whether there will be any major office projects in the city in the near future.
Similarly, the winding-up of the federal government’s Building the Education Revolution schools stimulus program has left industry players feeling gloomy about future work prospects in that sector.
However, judging by official industry forecasts, the office and education sectors will continue to provide the largest opportunities for builders.
Specifically, they will account for nearly half of all non-residential building construction in Western Australia over the next four years, according to the Construction Forecasting Council.
Following them will be the retail and wholesale sector, the health industry (see page 20), and the industrial market as drivers of building construction activity.
Perhaps the most surprising aspect of the forecasts is the expected strength of the office market, with the value of work done projected to reach a record $1.3 billion in 2012-13 and to stay around that level for four years.
This follows the completion of several major CBD office towers over the past few years, including 100 St Georges, Alluvion and One40William.
The two big remaining projects are City Square, being built by Brookfield Multiplex, and Raine Square, being constructed by Probuild.
Once they are completed, there are no other major projects poised to take their place in the CBD.
Of course, the office market extends well beyond the CBD, but the big-ticket projects are almost exclusively in the central city. The next big development could be the 29,000 square metre office tower to be built next to the Old Treasury Buildings.
Developers Mirvac and CBus Property finalised an agreement with the state government in October for a redevelopment of the wider precinct around St Georges cathedral.
The ‘vision’ for the precinct includes the new office tower, a boutique hotel in the Old Treasury Buildings, and demolition of the Law Chambers building to enable development of a new City of Perth library.
The project’s viability was boosted by a state government agreement to pay premium rental for the office building, which has been earmarked as the new home for the government’s legal agencies.
In a similar vein, the government is considering a new office development next to Dumas House in West Perth.
Around the city, there are three major redevelopment plans that eventually will provide opportunities for offices, apartments and other commercial buildings.
The Swan River foreshore development near the Barrack Street jetty, the Perth City Link (formerly Northbridge Link) development and the Riverside project at the eastern end of the city have all been under consideration for more than a decade, and their timing remains uncertain.
Riverside is the only project to have commenced, with Frasers Property Australia and Diploma Group proceeding with a $110 million development on the old bus depot site in East Perth. Their development includes apartments, an all-suites hotel, retail space and commercial space.
The next phase will be development of four hectares of riverfront land. Mirvac, Lend Lease and Brookfield Multiplex with Frasers Property Australia were named late last year as short-listed developers of the land.
The East Perth Redevelopment Authority, which is managing the project, plans to select the successful bidder by mid 2011.
Brookfield Multiplex, wearing its engineering contractor hat, is also potentially involved in the $600 million Perth City Link Project.
The City Rail Joint Venture, comprising Brookfield Multiplex and Laing O’Rourke, and the Perth City Link venture, comprising John Holland and GHD, were named last year as short-listed bidders for the sinking of the rail line between the CBD and Northbridge.
The alliance contract will be awarded in March 2011, and the rail-sinking project is scheduled for completion in 2014.
Other key steps needed before land is available for redevelopment include demolition of the disused Entertainment Centre, due to happen this year, and the sinking of the Wellington Street Bus Station, due for completion in 2016.
The three inner-city redevelopment projects are all designed to leverage a relatively small state government investment into a much larger private sector investment.
It has been estimated the 14ha Perth City Link site will attract $3 billion of private money, the 40ha Riverside site will attract $2.6 billion, and even more is to be spent on the foreshore development.
The great unknown is the ability of the Perth property market to absorb such a large increase in land supply, especially with developers such as Diploma and Finbar already proceeding with multiple inner-city apartment projects.
The city projects will also be competing for tenants and dollars with numerous other locations around the metro area, such as Subi Centro, North Fremantle and the planned Stirling city development.
Current developments in Subiaco include the $100 million Centro North project, to be built by Pindan and Qube Property Group.
Centro North will have 130 new dwellings, along with cafes and commercial space.
It will be followed by the planned opening of the Australian Fine China site at the western end of Subiaco.
At North Fremantle, the major development is the $120 million Rivershores apartments, a joint venture between JAXON and Northbank Bridges Pty Ltd.
The Rivershores project, comprising 58 apartments, highlighted JAXON’s strategic shift away from residential housing to larger residential projects.
In the education sector, the BER program is still boosting spending.
The state government expects to spend just more than $1 billion on new schools and improvements this year, helped by $425 million of BER funding.
Recent winners from this spending include Cooper & Oxley Builders, awarded a tender for the $30 million upgrade of Dongara High School, and Pindan, awarded a $15 million contract for improvements to Exmouth High School.
Other recent contracts were awarded to EMCO Building for a $21 million development at Ashdale College and Universal Constructions for an $18 million expansion of Atwell College.
Larger education projects due to proceed this year include the construction of new secondary schools at Baldivis, at a cost of $44 million, and Butler, costing $53 million.
The redevelopment of two older high schools (Applecross and Governor Stirling) will provide further opportunities.
The higher education sector has also provided plenty of work for Perth building companies.
Cooper & Oxley, for instance, is close to completing construction of the new $60 million Central Institute of Technology building in Northbridge.
Doric is currently proceeding with the construction of two new engineering buildings at ECU’s Joondalup campus, with a budget of $34 million.
Other Doric contracts under way include the $26 million construction of a new recreation centre at South Hedland.
