16/04/2008 - 22:00

Options developing in West Perth

16/04/2008 - 22:00

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Beyond the golden mile of Kings Park Road, a transformation is taking place in West Perth as developers pour money into the once-unfashionable end of the suburb.

Options developing in West Perth

Beyond the golden mile of Kings Park Road, a transformation is taking place in West Perth as developers pour money into the once-unfashionable end of the suburb.

No fewer than 20 new developments are either planned or under way in West Perth, bringing a total of 187 new apartments and more than 47,200 square metres of office space onto the market over the next few years.

It’s a wave of development that is mostly occurring outside the traditional bounds of Kings Park Road and Murray Street, in fringe areas near the railway line and City West.

By far the largest development in the area is Wellington Central, the eight-level office tower being built by ING Office Fund and Lewis Land, which will create 12,000sqm of office space for its tenant, the Department of Immigration and Citizenship.

Nearby in the City West precinct, Ascot Capital Ltd is planning to build a five-level, 5,000sqm office building.

The company bought several lots on Troode Street from Main Roads in December, and has lodged a develop-ment application with the City of Perth.

A project of similar scale is mooted for the corner of Newcastle and Charles streets, with plans being drafted for a 4,000 to 6,000sqm office building.

Another 5,000sqm of office stock is expected to be built at 1,118-1,120 Hay Street, on the Windsor Court site, which recently changed hands.

Knight Frank director of commercial and investment sales, Tony Delich, said property owners were taking advantage of the strength in the commercial office market to build on previously underdeveloped sites.

Mr Delich said there had been a shift in focus towards the northern end of the suburb.

“Everything from Murray Street to the railway line has been the forgotten part of West Perth for the past five or six years, because there were always better opportunities towards Kings Park Road and the traditional retail area,” he said.

“That thinking has now changed – there really isn’t any difference in land values.”

Mr Delich said the proximity of the area to the freeway and railway line would also be attractive to companies, particularly with rising fuel prices and rising car bay rents.

West Perth’s office vacancy rate of zero has also prompted developers to revert to commercial developments, rather than residential.

Richform Pty Ltd’s revised plan for a seven-storey building on the corner of Colin and Wellington streets contains 1,800sqm of office space, as well as 15 apartments.

Richform’s original development application, lodged mid-2006, included 47 apartments and no office space.

Several other mixed-use office and residential projects are in the pipeline, including Diploma Group’s project on the former CWA House site, and a recent application for 22 Altona Street.

MLG Realty managing director Marcus Gilmore said while the West Perth market had favoured residential development in recent years, developers that had mainly built apartments were embarking on commercial projects, in a similar fashion to those in the CBD.

“What will happen in the West Perth market, I believe, is that there will be a trend back towards mixed-use development, combining office and residential space,” he said.

“With rents being so high, (building) commercial space is far more viable than residential.” 

Knight Frank’s Tony Delich said it was easier and cheaper to build offices rather than apartments.

“Rents have moved to such a level that it’s now cheaper to build offices. It’s much more economically viable, because the rates achieved per metre for commercial offices, on a rental and strata level, are such that profits are higher,” he said.

“Strata office sales are currently in excess of $8,000/sqm. Likewise, rentals are in excess of $500/sqm, so the returns are there for investors.”

However, Mr Delich said there was little opportunity for large scale office projects in West Perth, due to a lack of suitable sites.

“To aggregate a big site in West Perth now is not easy. You’ve got to get two or three houses together, and those small businesses are not willing to move out,” he said.

According to figures from the Property Council of Australia (WA), 23,000sqm of new office space is currently under construction in West Perth, much of which is already pre-committed. 

This compares with 150,000sqm of stock under construction in the CBD.

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