Resources players light up West Perth's boulevard of dreams

West Perth’s ‘golden mile’ is shining brightly.

During the past 12 months, the value of all listed companies based in West Perth has surged more than 64 per cent to $31.2 billion, up from $19 billion last year.

There are about 30 additional listed companies operating in the suburb than there were a year ago, despite heavyweight Fortescue Metals Group shifting to East Perth and the delisting of Canadian-based nickel miner Lionore Mining International Ltd.

The collective growth of the area’s 230 companies is staggering.

It outstrips the surge in the Australia Securities Exchange’s small ordinaries index, which has climbed about 42 per cent in the same time and its resources-dominated materials index, which has added 33 per cent.

In contrast, the value of the resources companies in West Perth has grown by 76 per cent, from $16 billion to $28.2 billion, showing the market’s appetite for the speculative end of the market has remained white hot.

And as investors scour the market for the next big thing, those involved in running the headquarters are trying their best to find enough space to accommodate the growth.

Office space to rent along the golden mile is so scarce that several companies have to cast their gaze a little further afield to Subiaco, Nedlands and even Claremont.

There are about 200 listed resources companies in West Perth, a similar number to last year when WA Business News first assessed the locale and anointed the area as the new ‘golden mile’.

The collective value of West Perth’s listed resources companies has surged as rising base metal prices put a rocket under the share price of many of the area’s miners.

However, the increase in value to $28.2 billion excludes FMG, which was included in last year’s $16 billion valuation before deciding to move its premises to East Perth in August. Add the iron ore developer into the mix and the total value of resources companies would stand at $38 billion – a collective gain of more than 137 per cent.

In among the miners are a few industrial companies, including Automotive Holdings Group Ltd, which has been aggressively expanding by buying up dealerships across the country.

AHG’s share price has surged almost 150 per cent in the past 12 months, pushing its market capitalisation to $787 million, just shy of agribusiness Great Southern Ltd which has a market cap of about $900 million.

On a combined list, Great Southern is West Perth’s eighth biggest listed company, while AHG is ranked 12th.

But it’s not just the share prices that are growing for West Perth businesses; staffing numbers are also rising, with pressure on office space the obvious result.

“It’s incredibly tight at the moment,” Burgess Rawson office and retail leasing manager Clive Norman said.

He said the previous rule of thumb was that one person occupied 20 square metres of floor space, but that number was now somewhere around the 15sq m mark as companies tried and make do with the little space they had.

And average rents are also on the increase, with leasing agents saying they are attracting between $300 and $350/sq m, compared with about $200/sq m this time last year.

CB Richard Ellis leasing negotiator Luke Bray said a landlord for an office building in West Perth had decided to hold off pricing the building’s leases until closer to its completion date, which is expected in early 2008, because rental prices were continuing to rise.

Leasing agents said many companies were now assessing areas such as Nedlands, Claremont, Subiaco and Leederville.

Bryan Oliver is chief executive of Midwest Corporation, which is developing two iron ore projects in the Mid-West in a joint venture with Chinese steel giant Sinosteel.

Midwest’s share price has jumped from 42 cents to $3.71 in the past 12 months as it progressed from explorer to producer and turned a maiden profit.

Along with strong share price appreciation, the company has swelled in size as it hires geologists, engineers and other mining expertise to develop its projects.

Midwest’s employees are now spread across two floors in its Kings Park Road office block.

But it still needs more room, and while Mr Oliver enjoys working in West Perth because of its convenience, he may be forced to look at other areas such as Subiaco to accommodate growing staff numbers.

“Most of the Mid-West iron ore companies are based here, so from a Geraldton Iron Ore Alliance perspective it is very convenient,” Mr Oliver said.

“We are looking to move because we are running out of space, but everything in West Perth is sold and that’s well before the building has even been built.”

Arc Energy has outgrown its West Perth offices three times in the past seven years, and its continued growth has prompted the company to yet again find a new location.

During the past 12 months, Arc’s share price has increased by nearly 20 per cent, pushing its market capitalisation to nearly $500 million.

Arc managing director Eric Streitberg said the company’s employee base had grown from about 20 people three years ago to about 50 people, with the company currently operating out of two offices.

“It’s a real pain having people across two offices,” Mr Streitberg said.

“We are looking for one floor and it’s not going too well. It’s a very tight market, and in terms of getting a big floor space there are only two or three buildings in West Perth that offer that.”

Mr Streitberg said he had been searching for new premises for about 12 months.

He is also looking wider than West Perth but is not keen on moving to the CBD, which is also short of leasing space, because he did not want to be in a high rise tower.