Mining boom keeps tight rein on WA CBD office vacancy rates

THE resources boom in Western Australia continues to have a positive effect on the Perth CBD office market, with vacancy rates easing to 5.4 per cent in the second quarter, according to research by real estate agent Jones Lang LaSalle.

In the first three months of the year, 5.6 per cent of offices in the Perth CBD were empty.

Rents in the West Australian capital increased by 3.9 per cent in the three months to June 30 and have risen 11.2 per cent since the third quarter of last year.

“The Perth office market is looking solid for the next two years,” Jones Lang LaSalle national head of office leasing Kevin George said.

“Even with significant movement in the CBD, we expect any vacancies to be filled before the current tenants leave.”

Australian CBD office markets saw a positive increase in leasing of 24,800sq m recorded in the April to June period.

Office space in Perth is becoming increasingly sparse, with even West Perth, on the fringe of the CBD, recording only a 3.5 per cent vacancy rate.

“Rents will increase in Perth as new stock being completed is committed to in advance,” Mr George said.

“The 72,000sq m office development of City Square north at 125-137 St Georges Terrace is already 100 per cent pre-committed by BHP, PwC and Barrick Gold and that is expected to be ready by next year.

“The 42,000sq m office development at Raine Square has also been 100 per cent pre-committed to by Bankwest.”

Date: 14 July 2011 | For the full report, please visit http://www.theaustralian.com.au

Perth CBD office market tightens – Jones Lang LaSalle report

OFFICE space in the Perth CBD area is again becoming a highly sought after commodity as the city posts its highest net absorption figures in 40 years.

In the 2010 calendar year, Perth recorded a positive net absorption of 103,600sqm, the highest in the 40 years property group Jones Lang LaSalle (JLL) has been monitoring the national office market.

That increase prompted Perth CBD’s office vacancy rate to decline to 7.1 per cent in the December quarter, down from 7.9 per cent in the previous quarter.

In the West Perth business hub, the vacancy rate has tightened to 5.1 per cent.

JLL said the resources sector continues to drive demand in the Perth CBD office market despite only accounting for 11 per cent of white collar employment in Perth.

JLL WA managing director John Williams said the high levels of demand would inevitably flow through to a reduction in incentive levels and increases in rents.

“This will invariably lead to a tightening of yields as the market anticipates increases in rents from the second quarter of 2011,” he said.

“It confirms the underlying strength of the Western Australian economy and will undoubtedly focus investors’ attention on the Perth market.”

Date: 20 January 2011 | For the full report, please visit http://www.perthnow.com.au

Aspen Group starts on Swan Valley development

ASPEN Group says it has raised the minimum amount needed to start the development of a new residential area in the Swan Valley.

The property group raised the minimum $8 million from investors in six weeks, in a sign Aspen said indicates a pick up in the state’s property market on the back of a strong economy.

The development, called the Enclave at St Leonards, will comprise of 181 residential lots and form part of the Swan Urban Growth Corridor, adjacent to the Swan Valley.

“We have already received considerable interest from builders in the land when it becomes available on the market, with expressions of interest received on 60 per cent of the lots,” Aspen’s head of residential Chris Lewis said.

“We are seeing very strong demand for residential land available this close to the CBD, and expect this to continue, given the strong outlook for growth in the WA economy.”

Date: 13 January 2011 | For the full report, please visit http://www.perthnow.com.au

Blame game over Perth city tower

THE receiver of the $500 million Raine Square project in Perth’s CBD has rejected claims by developer Luke Saraceni.

Mr Saraceni has said Bankwest ignored his refinancing proposals in order to take control of the asset at the cheapest possible price.

KordaMentha principal Mark Korda said proposals by developer Westgem Investments, jointly owned by Mr Saraceni and fellow developer Hossean Pourzand, had been unsuitable for the banks, which appointed receivers on Tuesday.

The receivership was triggered when Westgem missed a $50m payment due on December 31, following delays to the troubled project caused by a bitter dispute between Westgem and original builder Salta Constructions.

“The banks have given them every opportunity to sell down assets or find a white knight to meet the payment,” Mr Korda said. “The banks were in very lengthy negotiations” with Westgem.

But Mr Saraceni accused the banks of failing to discuss his refinancing proposals. He questioned the motivation of the banks in taking control of the project, saying it was fully funded to completion and would generate a surplus.

“Over . . . months, Westgem had tried to engage with the security holders to progress a range of commercial proposals” intended to reduce the banks’ exposure and refinance the associated debt, Mr Saraceni said.

“The security holders did not at any time engage with Westgem” on any of these proposals generated by Westgem, he said.

Date: 13 January 2011 | For the full report, please visit http://www.theaustralian.com.au

Raine Square tower in receivership

RECEIVERS have been called in to the $500 million Raine Square development in the Perth CBD area, after the developers missed a payment.

Mark Mentha and Cliff Rocke of KordaMentha have immediately moved to manage the building site, after developers, Westgem Investments Pty Ltd, missed a $50 million payment on December 31.

Westgem is a company owned by prominent Perth property developer Luke Saraceni and his associate Hossean Pourzand.
The project’s financiers BankWest and Bank of Scotland International called in the receivers to Westgem.

“Under the facility agreement with Westgem, there’s been a breach now for some time,” Mr Mentha said.

“The financiers have been in protracted negotiations [with Westgem], affording every assistance and opportunity to sell assets or to find a joint venture partner or white knight but unfortunately they hadn’t been able to do that.”

Mr Mentha added that KordaMentha had been monitoring the project on behalf of the financiers for the past 18 months.

The building site has been affected by several delays and cost increases, including an eight-month delay last year when the original construction company, Salta Constructions, stopped work over in early 2010.

Building company Probuild took over construction in September 2010 and the receivers said it was making good progress, with the building scheduled to be completed by July this year.

In a statement, Saracen Properties, the parent company of Westgem, said it did not believe the appointment of receivers was necessary given the strong financial metrics of the project.

It added it had put forward a number of commercial proposals to BankWest which were being considered before receivers were called in.

The project is 80 per cent complete, and Saracen said it is fully funded for completion.

A spokesman for Bankwest said they were still looking at moving into the building early next year.

“Our overriding priority is to work closely with all our customers on a case-by-case basis to try and assist them with any difficulties that they may be experiencing, as we have done in the case of Westgem Investments.

“Bankwest also confirms it is the head tenant for the commercial tower in Raine Square and is excited about moving into our new headquarters.

“Our planned move is scheduled for early 2012 and we expect that the appointment of receiver and managers will cause no delays to this timetable.”

The building has 44,000sqm of office space – all of it already leased to BankWest which plans to move some 3000 employees into the 20-storey tower next year – and 13,000sqm of retail space, which has pre-leasing commitments of 70 per cent.

There will also be a 227-bay car park and a 650-seat food court.

Tunnel works that will connect the building to the new William Street train station are anticipated to be completed in 2012.

Date: 12 January 2011 | For the full report, please visit http://www.perthnow.com.au