A CONSORTIUM of private investors has kicked off construction of a Perth CBD office building without pre-committed tenants, punting on the continuing strength of the market.
The 3,100-square metre, eight-storey office project at 1006 Hay Street is set to be the only CBD office building completed during 2013.
The decision to proceed contradicts the expert view the market is not yet ripe for speculative building in the city because of the tight lending conditions.
The project, on the corner of Hay and Elder streets, near the freeway, is owned by a syndicate that includes several prominent figures in Perth’s mining and business sectors.
Former Mirabela chairman Craig Burton has 20 per cent of the syndicate, Steinepreis Paganin partners Roger Steinepreis, David Paganin, Mark Foster and Jonathan Murray own 40 per cent, Perth investor Charles Morgan has 20 per cent and Galluccio Griggs accountant Charles Galluccio 20 per cent.
The project’s manager, designer and builder, DMG Architecture and Construction, and one of its leasing agents, CBRE, said they were confident of leasing the building by the scheduled completion date in the middle of next year.
“With both the CBD and West Perth direct vacancy still very low, our confidence of having the building fully leased prior to practical completion is high,” CBRE office services director Lachlan Lewis said.
Mr Lewis said the building was ideally suited to a ‘whole-building’ tenant or to smaller tenants.
“There is very limited to nil supply (for smaller tenants) as all of the new builds have had a strong focus on the mid-size to very large part of the market,” he said.
A second selling agent for the project, David Evans, of Jones Lang LaSalle, said he was confident tenants would be attracted to the building because of its proximity to West Perth and its exposure to the freeway.
But property syndicate Primewest has taken the more customary approach in the CBD. It is seeking pre-commitments for its new office on St Georges Terrace, Veil 253.
“The leasing agents expect significant interest in the development and are confident it will soon be 100 per cent committed,” said Nick Van Helden, Jones Land LaSalle head of leasing WA.
Primewest expects to finish construction of the Veil 253 development at 253 St Georges Terrace in May 2014. The 3,500sqm project has received planning approval.
While 1006 Hay Street may be the only new CBD office to be completed in the next year, it is not the only CBD office space due to come on stream over the same period.
There a several projects under way in the CBD and West Perth.
These include GDI Property Group’s refurbishment of 8,500sqm at 197 St Georges Terrace and Qube Property Group’s 4,600sqm development at 100 Havelock Street and St Ives Group’s 3,500 sqm development at 1 Ord Street in West Perth.
The office refurbishments scheduled to be completed over the next 15 months are said to also be better suited to smaller tenants.
Refurbished and new office developments scheduled for completion by the end of next year in the CBD and West Perth range from 610sqm to 4,600sqm.
