COMMERCIAL PROPERTY SPECIAL REPORT Commercial property
FEATURE Office players lining up for next wave Key takeaways • Optimism returning to office market as vacancies gradually fall • Rents starting to grow, incentives pulling back • Developers seeking new approvals to benefit from demand uptick • Chevron HQ construction to mark turning point in office sentiment
FOCAL POINT: Elizabeth Quay is expected to be a fulcrum for Perth office development in coming years, but there is also potential for new builds elsewhere in the CBD. Photo: Gabriel Oliveira
Commercial developers are continuing to prepare for more favourable conditions in Perth’s office market.
conditions could spark a revival there were several firms in Perth CBD OFFICE in office development across the with large office requirements CBD. that were highly likely to trigger % VACANCIES EARLY Investment in the resources new office development. 2018 sector has steadily risen since “That’s because there are fewer 22.5 the middle of last year, with the large contiguous floorplates left While WA Police recently Canadian giant Brookfield, state’s biggest players seeking to for these requirements to be sat- extended its lease at Westralia which has three commercial launch new projects across WA. isfied,’ Mr Williams said. Square, Business News under- towers in the pipeline, national As a result, tenants are start- “So if these larger tenants are stands the terms of that deal listed player Dexus, and Victor ing to expand their footprints looking to move, then their only would allow for the time it Goh’s AAIG (see details p26). Dan Wilkie across the city, driving a rebound alternative is going to be a new would take to secure a deal with “There are plenty of alterna- [email protected] in rents and a vast reduction in build.” a prospective developer and con- tives, and there are plenty of the availability of large, contig- While Mr Williams would not struction of a new building. groups with big balance sheets uous office floors. be drawn on the identities of those In addition to the corporate behind those sites that can HE chances of any new The latest data from commer- tenants, discussions with several sector, Business News reported deliver the end product,” Mr Wil- major office tower emerg- cial agency CBRE showed prime industry sources unearthed a sig- last week that The University of liams said. T ing in Perth’s CBD in rents in Perth rose by 11.6 per nificant list of companies with Western Australia and Murdoch “They’ll only build if they have recent years have been slim at best. cent in the first three quarters upcoming lease expiries and large University were in the early stages a pre-commitment, and devel- Office vacancies hit a 22-year of 2019, the highest growth in space requirements. of planning new CBD campuses, opers are aware there are some high of 22.5 per cent in early 2018, the country. Sources suggest businesses with the institutions’ space require- bona fide potential occupiers out in line with an environment of CBRE said incentives – where such as Fortescue Metals Group, ments understood to comprise there. cost cutting and a widespread office landlords offer rent-free ConocoPhilips, Santos, Downer around 10,000 square metres each. “All the plans have been dusted reduction in head counts at periods or contribute to the cost EDI and Bankwest could seek Mr Williams said developers off and ready to go; they are all Western Australia’s biggest com- of fitouts to secure tenants – to occupy a new building, while across the city were position- primed, set and ready and can mercial tenants. were also falling in line with a Business News understands the ing themselves to deliver any pitch these buildings at tenants, In late 2019, however, national reduction in available quality state government is keen to stim- new office opportunities if they and there will be a few that come and local commercial developers office space. ulate the commercial market by emerged. up.” have become quietly optimis- JLL managing director John building a new headquarters for Developers with plans for Urbis director of economics tic that improving economic Williams told Business News WA Police. major office projects include David Cresp was less optimistic COMMERCIAL PROPERTY FEATURE
[I]f these larger tenants are looking to move, then their only alternative is going to be a new build - John Williams
OPTIMIST: John Williams says it’s highly likely several new towers will be built in Perth in the next five to 10 years. Photo: Gabriel Oliveira around the prospects of any new The Chevron headquarters, business of real estate develop- INCREASE IN PERTH buildings outside of Chevron’s being developed by Brookfield ment, we were able to provide % PRIME RENTS FIRST new headquarters emerging in on behalf of the energy giant, them with a solution to the Perth in the next couple of years. will be the first major tower building they were designing THREE-QUARTERS 2019 “The challenge is for a tenant to start construction in Perth for themselves, and we were also 11.6 that has an existing building since Woodside Petroleum’s Mia able to provide them with four “Our approach to the market in transport infrastructure and that could potentially continue Yellagonga office building was alternatives as well. is very much portfolio-driven,” the private sector in new mining to suit them, is that someone completed in 2017. “They were able to look at Mr Schibrowski said. and oil and gas initiatives – can’t build a new building for Brookfield head of devel- what the full market in Perth “We keep an eye on each of the reportedly $168 billion planned rents that are in line with the opment Carl Schibrowski could offer them, which gave new requirements coming up, over the next five years,” Mr deal that they have in the build- described the Chevron deal as them confidence to go back to and because we’re able to present Hynes said. ing that they’re in,’ Mr Cresp told an “out-of-the-box opportunity” the plan that they had, but do it a couple of different options each “Perth is now clearly in a Business News. that came about through its con- in more of an outsourced model.” time that really means that we recovery phase and we have con- “For tenants that are in a pre- struction subsidiary Multiplex, Mr Schibrowski said the inter- are well set to answer what those viction in the continued growth mium building, the economics of which had been working with national office landlord and significant players really need.” of the city as it diversifies its it make it difficult to stack up. Chevron under an early contrac- developer had taken a long-term ASX-listed Dexus is another investment opportunities.” “Is a new building going to tor involvement model. approach to Perth, with its pres- major player with a significant Outside of the CBD, Sirona happen? That’s going to depend Chevron had initially planned ence in the market dating back office proposal in the works, with Capital managing director on a tenant pre-commitment and to develop its headquarters to the early days of Multiplex. a $200 million redevelopment of Matthew McNeilly said he was a tenant possibly deciding that itself, but Mr Schibrowski said Mr Schibrowski said Brook- Carillon City approved by plan- positioning his company to take they no longer want to be in the those discussions with Multi- field had taken a similar view ning authorities earlier this year. advantage of an anticipated building that they’re currently plex unearthed the opportunity on Perth as it did on other Dexus head of office leasing upturn in office demand. in and isn’t able to find anything for Brookfield to get involved major resources hubs such as Chris Hynes said the Carillon He said Sirona, which was else in an existing building that’s and take on the development Calgary and Houston, which proposal followed its significant midway through developing a going to suit them. risk. also had highly cyclical office redevelopment of 240 St Georges $270 million office building in “That may lead to a new “We’ve been Chevron’s land- markets. Terrace, which included a new the centre of Fremantle, was development, but it’s very much lord and business partner in Other than Chevron, Brook- street entry, improved retail, increasingly busy in seeking going to depend on tenant California through various field has an approval in place a new childcare centre and a planning approvals. pre-commitment.” opportunities there, so we were to build an eight-storey office flexible office facility known as “I’m picking particular parts of At Elizabeth Quay, cranes able to draw on the global busi- tower above the Esplanade Bus- Dexus Place. the market … I think there is room are expected on lots seven and ness in those relationships,” he port, while its 52-storey Perth He said Dexus was taking a for more offices in Fremantle for eight early next year, with Mul- said. Plus mixed-use proposal at Eliz- positive view of the Perth office instance,” Mr McNeilly said. tiplex scheduled to start work “So when they had a bit of a abeth Quay includes around market. “Now is the time, in my view, to on Chevron’s new 55,000sqm, change of heart and decided 40,000sqm of office space across “We are seeing considerable be mobilising and getting ready purpose-built headquarters. they didn’t want to be in the two buildings. investment by the government for the next development cycle. FEATURE COMMERCIAL PROPERTY
NEXT WAVE: (Clockwise from top left) Brookfield’s Perth Plus, Chevron’s new headquarters, Esplanade Plaza, Dexus’ Carillon City and AAIG’s Capital Square. Images: Brookfield, Dexus, City of Perth Office players mobilise for next cycle
“But we’ve got to think Hughes, who said market con- recent years on upgrading its forced into it. Our project man- worth a look in the next year or beyond just the traditional ditions would have to improve existing office portfolio. agement team has been very two, but it’s not going to do a lot oil and gas, resources and much more significantly for “To keep your tenants you’ve busy for the last five years. until we get vacancies and incen- government tenants; we’ve got the developer-landlord to got to do a new fitout, give them “Having been in the game for tives a bit more under control. to be thinking more widely pursue new commercial office a proper incentive and reset the 42 years, I’ve seen it all. You don’t “Our investors want a divi- than that.” opportunities. rent,” he said. get lucky in this game, you have dend, and so if you’re giving cash Not so optimistic was APIL Instead, Mr Hughes said APIL “If you don’t do that you’ll lose to see the trends. to a tenant, there’s none for the Group managing director Peter had concentrated its efforts in your tenant, so you’re kind of “Perth property might be investor.”
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SEARCHENGINE WA’s LARGEST COMMERCIAL PROPERTY OWNERS ...your key to WA business RANKED BY TOTAL LETTABLE AREA IN M2
Change from previos Total lettable area Rank year Company name Senior executive and title in m2 Properties owned
Mr Nick Ozich — Brookfield Brookfield Place (86,000), Brookfield Place Tower 2 (34,000), 108 St Georges Terrace (38,982), Bishop’s 1 Regional director, developments 186,656 See (17,600), EY Centre (11,511)
Mr Scott Travers 240 St Georges Tce (47,300), Kings Square 1 (23,000), Kings Square 2 (20,440), Kings Square 3 (9,185), Regional general manager, office 2 — Dexus 138,003 50% stake in Alluvion (11,200), Carillon & City Arcades and office tower (18,006), SGIO Building (8,872) and industrial investments
Mr Miles Rowe 33% stake in Raine Square (14,500), Emirates House (3,588), Eastpoint Plaza (11,515), WorkZone West 3 Charter Hall Regional portfolio manager, WA 103,118 (15,602), SevenOaks (20,837), 225 St Georges Terrace (20,960), Optima Centre Osborne Park (16,116)
Mr Steven Gillard Mill Green (40,280), Westralia Square (32,635), 251 Adelaide Terrace (10,006), 1 Adelaide Terrace 4 GDI Property Managing director 102,746 (19,825)
The Quadrant (23,309), Australia Place (15,355), ENI House (14,391), 251 St Georges Terrace (9,745), IBM Centre (8,466), Mr John Bond 1 Forrest Place (6,543), 20 Parkland Road Osborne Park (4,825), Joondalup House (4,352), Lawrence House Mt Pleasant 5 — Primewest Co-founder, executive chair 102,171 (3,876), 619 Murray Street (3,950), 67 St Georges Terrace (3,484), 307 Murray Street (3,250), 255 St Georges Terrace (625)
Mr Ross Robertson 50% stake in Central Park (66,059), Perron Group HQ - 4 Plain St (1,465) 6 Perron Group Managing director 67,524
Mr John McBain 45 Francis St (22,013), 111 St Georges Tce (18,978), 144 Stirling Street (11,042), SGIO Building at 46 Colin 7 Centuria Joint chief executive 65,328 Street (8,439), Havelock House at 29 Havelock St (4,856)
Mr Daniel Cooper 22 Mount Street (6,874), 18 Mount Street (4,030), BGC Centre at 28 The Esplanade (15,314), 20 Walters 8 BGC Australia Chief executive NFP Drive (14,837), 67 Walters Drive (6,368), 5 Hopewell Street (4,245), Rowe Ave (10,570)
Mr Matthew Lutman Allendale Square (29,070), David Malcolm Justice Centre - 50% MPT, 50% Keppel REIT (30,992), 585 Hay 9 Mirvac Portfolio manager WA 60,951 Street (889)
10 GIC Real Estate 57,710 The Quadrant (23,309), Exchange Tower (34,401)
11 Investa Property 54,679 50% stake in QV1 (31,260), Subsea7 House (11,447), Wellington Central (11,972)
Mr Brian Dixon 235 St Georges Terrace (17,836), QBE House (19,807), City of Perth Library (3,500), 565 Hay Street 12 — Perth Diocesan Trustees Secretary 41,143 (7,900)
Mr Nicholas Ozlanski St Martins Tower (21,470), Calibre House (10,661), 40 St Georges Terrace (7,451) 13 — St Martins Properties Property manager, WA 39,582
Mr Mark Hector 430 Roberts Rd Subiaco (1,657), 437 Roberts Rd Subiaco (3,695), 450 Roberts Rd Subiaco (2,198), 100 Havelock 15 Qube Property Group 37,850 St West Perth (4,670), 170 Railway Rd West Leederville (3,285 JV with WALGA), 999 Hay Street (11,770), Hilton Managing director & partner Shopping Centre (1,900), Bennett Springs Shopping Centre (8,672 JV with Erceg Management)
16 Cbus Super 36,000 one40william (36,000)
17 GET THE FULL LIST ONLINE businessnews.com.au/List/property_commercial_owners 34
All information compiled using surveys, publicly available data and contact with industry sources. Other companies may be eligible for inclusion. If you believe your company is eligible, please email: [email protected] WND: Would Not Disclose, NFP: Not For Publication, N/A: Not Applicable or Not Available. FEATURE COMMERCIAL PROPERTY Primewest winning in ANATOMY OF A FLOAT tough IPO Offer price: $1 per share Capital raise: $100m for a 29% interest market FY19 net revenue: $25.6m Funds under management: 76 Assets under management: $3.9bn Employees: 31
GROWING UP: John Bond is looking forward to the new opportunities an ASX listing will bring Primewest. Photos: Attila Csaszar
Investors across Australia have backed Primewest’s ambitions to expand its offering via an ASX listing.
Dan Wilkie interest to investors,” Mr Bond told “I think it’s going to be an inter- Nicheliving announced plans to [email protected] Business News. esting time in the property space; list on the ASX in late 2017, seeking “We’ll be paying a 5 per cent I can’t go into too much detail, but $ to raise up to $12 million. PRIMEWEST has braved the most yield, which will be fully franked, we have things that we are looking m Midway through last year, how- difficult initial public offerings so that’s pretty attractive in this at and talking about.” EXISTING50 CLIENTS’ ever, Nicheliving revised its listing market in years as it closes in on market.” Primewest’s float success comes plans, reducing the capital amount an ASX listing. The business has Mr Bond said Primewest would at a time when major floats are CONTRIBUTION TO to $5.7 million after a Singaporean managed to raise its targeted $100 use the capital raised to expand being pulled from the market en PRIMEWEST IPO investment group took a corner- million at the same time that bil- its wholesale mandate business, masse, with investors showing stone stake in the company. lions of dollars in floats are being building on capacity developed little appetite for new companies bad out there at the moment, The builder-developer with- pulled over concerns of over- following a tie-up with Singapore’s on the ASX. unfortunately,” Mr Ohm told Busi- drew its float in December, while ly-high valuations and continuing GIC, which recently appointed Several high-value IPOs have ness News. Nicheliving managing director global economic uncertainty. Primewest to seek investment been scrapped in recent weeks, “We were hoping it would Ronnie Michel-Elhaj told Business Western Australia’s biggest opportunities in commercial prop- including Singapore-based Prop- improve quite a bit over the News this week the company was home-grown property play will erty in Perth and Brisbane. erty Guru’s $1.4 billion plan, second part of the year but it’s just simply waiting for the right time begin trading on the ASX on “Typically they require an Latitude Financial’s $3.2 billion not happened, people just aren’t to relaunch the IPO. November 8. investment manager to have float, and Retail Zo’s $482 million willing to support what IPOs are “In our first path to IPO we actu- Chief executive John Bond equity in the deals, so we’d like listing. on offer at the moment. ally achieved what we needed to said Primewest had been able to to be able to put that in off our Data from EY shows that, in the “And that’s a challenge. The achieve in terms of capital raising source $50 million of investment balance sheet rather than go to first half of 2019, IPOs in Australia large ones aren’t getting away, – the interest was certainly there,” from its existing clients, while Syd- syndicate investors,” Mr Bond said. had declined 43 per cent by volume primarily on valuation issues, and Mr Michel-Elhaj said. ney-based lead manager Moelis “It’s much more seamless to do and had plunged 73 per cent in the smaller part of the market’s “With the fact that we are now Australia secured the remaining that, and it’s an alignment of inter- value compared with the first six not there either; it’s pretty dire at the largest medium-density devel- capital. ests with the institutions. months of 2018, with small-cap the moment.” oper in WA, our focus is now to get Mr Bond said there was sig- “Other than that, we think listings in technology, materials Primewest’s listing follows WA to a critical point where our pro- nificant interest in the float, there are lots of opportunities and healthcare drawing the most residential property play Nicheliv- jects are at the right level and we with both tranches significantly where we can deploy equity. We’ve investor interest. ing having several stalled attempts are trying to reach the right timing oversubscribed. been a management company HLB Mann Judd partner Marcus at getting an ASX float over the to be able to relaunch when we feel “We are lucky that the property solely, we haven’t had a balance Ohm described the IPO market line in the past two years. there is demand.” space is definitely in demand and sheet. as the worst he’d seen for quite a Primewest yield is definitely in demand, so “We get lots of opportunities number of years. SEARCH we happen to be providing two of across our desks that we haven’t “We’ve been reporting the IPO There are 169 results from our index of 100,665 articles, those key ingredients that are of been able to do anything with. market since 2005, and it’s pretty 10,058 companies and 37,844 people COMMERCIAL PROPERTY FEATURE
Established: 1995 Founding directors: John Bond, Jim Litis and David Schwartz
PRIMEWEST WA ASSETS Commercial property: $1.1bn Large format retail: $436.9m Convenience: $427.6m Industrial: $76.3m Other: $200.6m
PRIMEWEST ASSETS OUTSIDE OF WA Commercial property: $389.5m Large format retail: $514.1m Convenience: $380.5m Industrial: $299.5m ASSET: The Quadrant at 1 William Street is Primewest’s highest value commercial building GROWING UP: John Bond is looking forward to the new opportunities an ASX listing will bring Primewest. Photos: Attila Csaszar in WA, having been independently valued at $206 million.
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Many of Perth’s progressive local Multi-function light poles have been governments and commercial used to mount a wide variety of operators are effectively investing services and infrastructure ranging in their external lighting from CCTV cameras, Wi-fi antennas infrastructure used for roads, and promotional banners. public open space and sporting facilities. Use of Intelligent lighting controls employing various techniques such The increase in environmental as; electronic scheduling, dimming, awareness is now becoming a top daylight harvesting and proactive priority for electrical upgrades. maintenance all providing greater Replacement of existing efficiency. infrastructure to improve efficiency and reduce running costs has shown to be the best solution. This The integration of centralised in turn improves their electronic booking systems, used for environmental sustainability, active open space allow lighting to be passive security and therefore scheduled as required. This in turn reducing ongoing maintenance benefits the Local Government costs and in some cases allocating Authorities as they tend to operate costs in a user-pays approach. lighting regardless of the space being used or not. The way forward is visible in LED technology, which enables the There is a wide selection of products reduction in energy consumption, that tick all of the boxes, not to extending the asset lifecycle and mention the addition of high- minimizing maintenance costs. performance manufacturing and aesthetics, to suit your environmental requirements.
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SEARCH Commercial Property REPORT SPECIAL There are 529 results from our index of 100,665 articles, 10,058 companies and 37,844 people
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