West Perth digging itself out of a hole

Demand for office space in West Perth has fluctuated widely with commodity prices and the mining sector’s fortunes but the suburb is now attracting interest from diverse industry sectors.

Reporting by Business News in June 2007 found there were about 230 ASX-listed businesses operating out of West Perth, with 200 of these focused on resources.

At that time, the collective market value of these organisations was $31.2 billion, with the resources companies accounting for $28.2 billion of this. That figure marked a 76 per cent increase on the previous year and reflected the wave of rising commodity prices, which had given the share price of most of the area’s miners a substantial lift.

The booming mining sector lifted demand for office space, leading to a zero vacancy rate in July 2008. 

West Perth a decade later presents a stark contrast, dotted with ‘for lease’ signs and fronting an office vacancy rate of about 16 per cent.

This is a slight improvement on January 2017, when West Perth’s office vacancy rose to a peak of 17.9 per cent.

There are now about 180 listed resources companies operating out of West Perth (out of a total 219 listed companies based there), according to the BNiQ Search Engine.

While the June 2018 market value of the resources businesses of $14.13 billion is significantly lower than the 2007 figure, it represents a 63 per cent increase over the past year, up from $8.64 billion.

JLL director of leasing WA Mitchell White said that, as small to medium resources companies had been the lifeblood of the West Perth office market, the precinct was slowly coming back to life.

Some companies had since shifted from the city fringe into the CBD, lured by cheaper rents and refurbished buildings, Australis Oil & Gas and Metals X among them.

However, others such as Hancock Prospecting, Western Areas and Technip still called West Perth home.

“For some, West Perth will always have appeal due to price, access and the benefits of being located alongside like-minded companies, but it is important that landlords continue to refurbish and regenerate their buildings to remain competitive,” Mr White told Business News.

“Whilst we are seeing a trend of companies moving to the CBD, equally we are seeing evidence of companies moving from outer suburban areas into West Perth.”

Mr White said about 50 per cent of JLL deals in the past year were for resources and engineering firms, including Goldfields taking out 1,500 square metres of expansion space at 50 Colin Street.

He said there seemed to be greater diversity in enquiry, particularly from IT groups, financial services and small law firms.

Burgess Rawson associate director Clive Norman said West Perth remained a popular choice for resources companies, but had also seen a range of different business sectors enter the area.

“The market does feel more positive with enquiry levels stronger although that has not necessarily translated into transactions yet,” Mr Norman told Business News.

“More interestingly, sub-lease space (is) almost non-existent, which is positive as tenants are now using what may have been surplus space and have actually withdrawn it from the market.”

Mr Norman said the medical sector was increasingly eyeing leasing and purchasing opportunities in West Perth.

A recent transaction included Burgess Rawson’s sale of two West Perth freestanding properties to separate medical specialists for more than $2 million each.

Mr Norman said the team had also received enquiry from marketing and IT businesses. 

For IT company Qbit, West Perth was the perfect choice for it to hang its shingle.

Qbit director Fabio Suffell said the business purchased the 180sqm suite 1 at 45 Ord Street in 2017 for just under $1 million, shifting some of its corporate support team into the building a few months ago, while keeping its Westminster office as its operations centre.

He said West Perth was chosen for its proximity to clients in the area, including Subiaco and Leederville, greater parking options and access than the CBD, and ground floor exposure. 

“We wanted to be in the heart of West Perth,” Mr Suffell said.

“We took the opportunity to buy a place so that we wouldn’t be at the whim of the landlord as the property market improved.

“And we didn’t buy for today we bought for the future; we know that West Perth will come back, is coming back.”