Slim pickings in city for space eaters

An increase in office vacancies in Perth’s CBD has shifted the market dynamic clearly in favour of tenants, but despite a historically high level of empty floors, there is little choice for companies that need a lot of space.

Business News reported online last week that several firms were analysing their options in Perth’s CBD office market, with more than 400,000 total square metres available.

Companies testing the waters include KPMG, Insurance Australia Group, Westpac, Telstra, and Quadrant Energy, with all of those firms looking for more than 7,000sqm to consolidate their respective workforces.

With Perth’s office vacancy rate expected to come in north of 24 per cent when the Property Council of Australia releases its figures this week, it would be expected that these firms would have plenty of choice.

However, that’s not necessarily the case, with just six buildings in Perth CBD having vacant, contiguous space of more than 7,000sqm.

There are another 10 buildings with sufficient vacant space, but landlords would have to shift existing tenants around to free up contiguous floors.

Y Research chief problem solver Damian Stone said the alternatives were further reduced when it was considered firms seeking to move would be aiming to upgrade from their current digs, with proximity to the core of the city and public transport links a key driver.

“There are not a whole heap of options, which is striking to say in a market where there is over 400,000 square metres vacant,” Mr Stone told Business News.

“If you’re a top-tier company looking for a premium or A-grade building, with this level of space available in contiguous floors, your choices are certainly diminished.”

Mr Stone said the most attractive landing spot would likely be Brookfield Place, the 45-storey tower that was named the nation’s best office building in 2014.

At time of writing, there were 7,854sqm of sublease space available at Brookfield Place, already fitted out and ready for a prospective tenant to move in.

Other big vacancies include 8,779sqm at Central Park, as well as 8,370sqm of refurbished space at Golden Square, formerly May Holman Centre, including the prime top floor of the building.

In East Perth, oil and gas giant Shell’s old Perth headquarters at 2 Victoria Avenue is completely vacant, as is the eight-storey office building at 239 St Georges Terrace.

But Mr Stone said a major tenant would be seeking a recently completed office to call its own, while some of those were seeking the prestige of naming rights at a St Georges Terrace address.

Another possibility, albeit located outside the heart of the CBD, was the 23,156sqm KS1 on the corner of King and Wellington streets, which is also completely vacant.

However, Mr Stone said shifting to the north side of the city at KS1 was a daunting proposition for many firms, which would prefer to be located along the Terrace.