West Perth office values hit records

With some A-Grade office buildings in West Perth tipped to achieve record rents of $550/square metre shortly, the area’s office market has been swamped with prospective investors.

The level of demand has seen the value of some properties in West Perth almost triple in two years, with A-grade yields tightening to between 6.25 per cent and 7.5 per cent.

A three-level A-grade office building at 1 Altona Street is understood to be close to selling for more than $17 million.

Its owners, Brackfield Pty Ltd, bought the 1,689sq m site in April 2005 for $6.23 million.

Local and eastern states parties are believed to be beating a path to the fully-leased property because of its significant potential for rental reversion come 2009.

Development sites have also been attracting enormous interest from local developers and syndicates.

WA Business News understands a landmark site at 789 Wellington Street, occupied by the two-storey Pastoral House, is under contract for $13 million, equating to more than $4,500/sq m.

With a residential/commercial zoning to play with and significant office buildings under construction nearby, its soon-to-be new owners are believed to be making the most of the site by building a new office building of 5,500sq m.

The site sits opposite the RAC building and ING Real Estate and Lewis Land’s eight-storey Wellington Central development, of which a total of 12,000sq m of space has been pre-committed by the Department of Immigration.

Burgess Rawson director Rob Selid said local developers were very active in the market and were acquiring sites to redevelop into office buildings.

“We’ve just sold an 801sq m development site at 16 Thomas Street for $2.6m plus GST,” he said.

“This property was last sold in November 2006 for $1.97 million, showing an increase of 32 per cent in six months.”

West Perth agent and Jones Lang LaSalle capital markets director Tom Nattrass said sales activity in the area had been much higher than last year, underpinned by rental growth and the absence of vacant office space.

Mr Nattrass said the agency had forecast growth in rents of between 10 per cent and 15 per cent next year, which would keep property values high.

“Owners may be seeing a lot of growth in the value of their assets, but buyers should still feel confident that they’re getting a good deal,” Mr Nattrass told WA Business News.

“Passing yields have been low, but when the rent reviews come through they will jump up.”