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West Perth the second CBD

WEST Perth is often regarded as the most viable alternative to the Central Business District for a office location.

Companies are moving from the CBD to West Perth for a number of reasons according to Stanton Hillier Parker sales consultant Rob Selid.

Lower outgoings and easier access for staff and clients are among the factors cited.

Furthermore, businesses that are looking to

relocate and not spend millions on an strata titled office building find West Perth to be the most attractive alternative to the CBD.

“With the resurgence of East Perth, this may change,” Mr Selid said.

According to a West Perth property report by real estate agent First Pacific Davies the comparative rental cost of West Perth to the CBD is another factor influencing demand.

“A grade buildings in West Perth currently reflect asking rents of $175 to $225 per square metre while in the CBD asking rents range from $140 to $200 per square metre per annum,” the report said.

“Although the CBD appears lower in the base rental factor, one must take into account the benefits of West Perth’s lower outgoing costs and lower car bay rental (a ratio of three car bays to one in Perth for a similar cost).”

Currently, the majority of West Perth occupants comprise the finance sector (50.8 per cent) and mining (14.2 per cent). However, medical, government and companies in the business service sector also are moving to West Perth.

First Pacific Davies believes low interest rates and evidence of a strong recovery of rental levels have caused yields to tighten. This trend, the report says, is likely to continue for the medium term.

“In addition, new developments are set to test rental margins further in excess of $220 net rental per square metre,” the report said.

The Australian Financial Review recently reported that West Perth ranked third Australia-wide in effective rental growth for office space.

The West Perth sales market is extremely active according to a market profile undertaken by Stanton Hillier Parker with buyers, particularly owner occupiers, chasing a tight market with little stock.

Stanton Hillier Parker, however, does not expect the market to move much in the near future.

“We expect little growth in office

commercial land values in the medium term as it is difficult for developers to achieve adequate returns in the current market.

Stanton Hillier Parker believes opportunities lie with the surge in call centres, now worth about $2.5 billion a year and growing at 25 per cent a year.

This, and the growth in boutique style

consulting services, will increase the demand for quality buildings.

On the downside, some mining companies, vulnerable to international commodity prices and exchange rate fluctuations, have had a hard time of it in recent months.

This has resulted in mining companies and mining support industries either moving out of West Perth or reducing the office space that they require.

Pressure on mining companies has been the main cause of increased vacancy rates in West Perth according to an office market report by the Property Council of Australia.

Besides the mining influence on vacancy rates, a key cause of the rise was the release of 10,300 square metres of new space.

Total vacant stock has jumped 88 per cent in West Perth in the year to July 1999 from 19,400 square metres to 36,500 square metres.

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