Withoffice space in Perth and West Perth at capacity, the corporate sector is being forced to look further afield for premises to grow into.
Withoffice space in Perth and West Perth at capacity, the corporate sector is being forced to look further afield for premises to grow into.
It is a situation that is beginning to reshape the office landscape of neighbouring city areas, including Subiaco.
Junior explorers and mining companies have started shifting into the trendy retail precinct, joining a corporate landscape that features advertising agencies, marketing consultancies and public relations companies, which moved there following the redevelopment of large parcels of land about five years ago.
With West Perth’s vacancy rates at a record low, Epsilon Energy Ltd left its Ord Street premises during the past six months to take up residence in Agnew Street in Subiaco.
It was a move the company said at the time was needed to accommodate its growth plans.
The uranium explorer’s move puts it in close proximity to a swath of operators in the sector, including John Borshoff’s Paladin Resources Ltd and associated companies Summit Resources Ltd and Deep Yellow Ltd.
About 30 per cent of listed companies with a registered address in Subiaco have exposure to the uranium sector and collectively have a market worth of $5.2 billion.
They join other mining groups expanding into Subiaco, including Newmont Mining Corporation, which has pre-committed to take up 4,600 square metres of office space at Hawaiian’s Colonnade redevelopment.
All up, Subiaco’s listed companies, of which there are currently about 40, are worth $6.5 billion, well short of the $30 billion market worth of about 200 companies based in West Perth.
Yet it’s the extension of West Perth’s ‘golden mile’ that is helping to push up rent prices in Subiaco.
Many would-be residents are also being confronted with tougher lease conditions.
Jones Lang LaSalle leasing director David Evans said there was very little space to let in most inner-city areas, including Subiaco.
He said Subiaco office rents had doubled in the past three years to about $400 a square metre and landlords were often asking for longer lease commitments.
“The minium is a five-year lease and it’s pushing up to seven- and 10-year leases,” Mr Evans said.
“People that are trying to negotiate a two-, three- or four-year lease won’t get it.”
He said supply was likely to be constrained with limited development taking place and very little space remained in yet-to-be-built new office projects.
One Perth company pre-committing to an office project is iiNet, which will move out of its two Adelaide Terrace offices in 2009 to take up two floors and naming rights in Luke Saraceni’s yet to be completed Hay Street office project on the former BBC Hardware site.
Mr Evans said he was currently negotiating the lease of another floor in the same building, which, if successful, would leave only one office floor left to let.
The building is not expected to be completed until the end of next year.
Property Council of Australia WA executive director Joe Lenzo said Perth’s rising rents and office space shortages were changing the face of areas such as Subiaco, Leederville, Herdsman and even Belmont.
“We are finding they are now beco-ming substantive markets,” he said.
Mr Lenzo told WA Business News many companies that did not necessarily need a Perth address had moved to the city when vacancy rates were low.
“We are seeing many service companies and engineering firms move out because they don’t have to be in the city where as the professional service firms are staying,” Mr Lenzo said.
He said the council was considering widening its current CBD-centric survey of office rents to include Subiaco, Leederville and other growing commercial precincts.
But it was unlikely the growth in the corporate sector would affect Subiaco’s bustling retail strip because retail leases attracted higher rent rates, Mr Lenzo said.
