Upbeat outlook for leasing

COMMERCIAL leasing agents are expecting a positive start to the New Year after what has been a patchy and lacklustre performance for most of 2003.

Agents report a substantial increase in leasing inquiry in recent months, particularly in West Perth, where junior resources companies are searching for office accomodation and established West Perth tenants are seeking to expand or relocate.

And some of this demand for office space is expected to overflow into Subiaco and the CBD due to the limited A-grade building stock available in West Perth.

CB Richard Ellis leasing negotiator Soni Fairhead said lease inquiries in West Perth had been up and down for most of 2003, but inquiries for larger tenancies had increased markedly in the past month.

And that the level of inquiry augured well for the coming year.

“There will be more exciting things happening next year,” she told WA Business News.

Ms Fairhead said established West Perth tenants looking for more than 100 square metres in West Perth were facing difficulties.

“The problem with West Perth is there is very little high-grade office space,” she said.

“We have found that with a few tenants looking for good A-grade space, we have had to tell them to go elsewhere.”

Ms Fairhead said tenants who wanted quality A-grade space were considering going to Subiaco or into the CBD, where current incentive levels were proving attractive.

“For tenants of good size looking in West Perth there really are only one or two options,” she said.

Jones Lang Lasalle leasing negotiator Shelley Ritter said what quality A-grade space there was in West Perth was disappearing fast.

“A few deals have been done in recent months off the back of the oil and resource sector,” she said.

“A number of mining companies are now looking for significant chunks of space.

“We would expect the vacancy level in West Perth to drop next year.”

Ms Ritter agreed that the lack of quality A-grade space in West Perth might force some companies to look at other areas.

Subiaco was being considered as an option, she said, with a new building in Subiaco offering significantly lower outgoings than the older West Perth building stock.

Colliers International executive commercial leasing, Jeremy Robotham, said that from October onwards there had been more small resource companies, contractors and existing resource operators looking for short-term project space.

He said while the initial lease may be for three to six months, if the project went ahead leases could be taken out for a couple of years.

Resource companies looking for project space traditionally want office accomodation with large floor plates and the greater efficiencies that go with that.

“These companies usually allow 12 to 15sq m per person, so they are open plan with few offices,” Mr Robotham said.

Tenancies with existing partitions were also attractive for resource project space.

“These companies want to grab computers, plug in and get to work,” he told WA Business News.

With BHP Billiton due to announce the winner of its engineering contract at the end of the month, several engineering companies, including Fleur and Hatch, are understood to be are searching for additional office space.

NSC Corporate associate director Warren Wright said the firm awarded the contract would have an immediate requirement for 1,000sq m and, nine months later if the project was given the go ahead, this could grow to 4,000sq m.

Mr Wright said 2004 was shaping up to be a positive year, particularly if the State Government’s 15,000sq m office space requirement came to fruition.