C-Grade Office Case Study Exploring options for Adaptive Re-Use in the Central City July 2017 Cameron Chisholm Nicol • identify key considerations, constraints and The concepts are also supported by a series opportunities; and of key considerations, including structural • provide relevant information that generates interventions, service upgrades and building Executive interest in potential redevelopment. code compliance. The concepts presented in this report are The key outcome of this report is that a thorough Summary based on a hypothetical, generic building that is analysis of any proposed scheme in terms of representative of the majority of C-Grade office the benefits and constraints, including cost, is buildings in the city. required in order to establish its viability. The Perth is currently experiencing challenging key findings of the case study are summarised in economic conditions, largely driven by a A total of six architectural concepts explore how the table below. complete transition from the construction phase this building could be: of the resources boom to the production phase. 1. upgraded to an A-Grade office; The City of Perth will now engage with industry 2. converted to a secondary or tertiary education to explore the potential of the City’s under- This issue is being felt in the City’s office facility; utilised C-Grade building stock. The design market, with a vacancy rate approaching 25% 3. converted to student accommodation; schemes showcase best practice, innovative (Y-Research, February 2017) (July Property 4. converted to multi-residential apartments; and creative ways to bring new life to these Council figures at 21.1%, decreasing from 5. converted to mixed-use; and buildings, which ultimately have the potential to 22.5% January 2017) and the equivalent of 11 6. converted to a health and well-being hub. add interest and vitality to the central city area. Woodside Plaza buildings (450,000sqm) vacant across the central city area. With multiple The six uses were carefully selected based With the market now beginning to transition to choices for high quality space at an affordable on market research and the opportunity they recovery, now represents the perfect time to rate, there are limited tenants in the market present for the sustainable growth of the city. consider the repositioning of lower grade assets. for older, secondary properties in non-core locations. Weak demand and tenants’ flight to Yield Car Parking / Cost Estimate Indicative Construction quality will ultimately leave many C-grade office Concept NLA (sqm) (# of units) Bike Parking ($ / sqm) Timeframe (months) buildings in limbo. Generic Building 3400 N/A 12 / 0 N/A N/A As a result of these market conditions, this case A Grade Office 3900 N/A 12 / 50 $2,798 - $3,606 15 – 18 study was commissioned by the Economic Education 3900 n/a 0 / 0 $2,643 - $3,558 9 – 12 Development Unit of the City of Perth to explore Student N/A 79 0 / 87 $2,254 - $2,943 12 – 16 the potential adaptive re-use of older, C-Grade buildings. The intent of the study is to: Multi-Residential N/A 38 12 / 17 $2,428 – $3,045 12 – 16 • generate discussion within the industry; Mixed-Use 4400 24 0 / 0 $2,694 - $3,157 12 – 15 • provide thought provoking concept Health and Well-Being 3600 N/A 12 / 0 $2,510 - $3,203 12 – 15 design schemes: Contributors 4 1 / Introduction 26 6 / Key Considerations 27 Structural Contents 6 2 / Commercial Context 28 Mechanical Services 7 West Australian Office Market in 2017 28 Electrical Services 9 C-Grade Office Stock – The Perth CBD 28 Hydraulic Services and Beyond 28 Fire Services 9 Trends and Future Outlook 28 Ecologically Sustainable Design 10 A-Grade Office 29 Approvals Process 10 Education 29 Statutory Compliance (DA) 11 Student Accommodation 29 Building Code Compliance 11 Multi-Residential 29 Environmental Health and Public Buildings 12 Mixed Use 29 Heritage 12 Health and Wellbeing 29 Contamination 13 3 / Generic Building 30 7 / Cost Estimate and Construction Timeframe 16 4 / The Design Process 32 8 / Conclusion 19 5 / Concept Design Schemes 20 A-Grade Office 34 9 / Appendices 21 Education 35 A Summary of Key Considerations 22 Student Accommodation 41 B Quantity Surveyor Cost Estimates 23 Multi-residential 47 C Contributors 24 Mixed-use 48 D Photo Credits and References 25 Health and Well-being Overview 5 Using this guide Introduction City of Perth / C-Grade Office Study 4 1 Introduction The City of Perth is committed to ensuring the schemes that illustrate how existing C-Grade central city’s primacy as an office location, office buildings can be upgraded or converted with continued and significant investment in to another use for building owners and potential the City’s presentation and supporting projects developers to consider. and infrastructure. The transition away from the construction phase of the resources boom The report is structured under six key chapters, and current levels of commercial vacancies including: has, however, presented the opportunity to • Commercial Context | Outlining the current think creatively about emerging sectors of our market conditions in the Perth central area and diversifying economy and the type of city we frames the opportunity for the six potential want in the future. future uses; • The Generic Building | Examining the existing Around the globe cities are becoming more C-Grade office stock and the process of complex and multi-faceted, with ‘central defining a hypothetical building on which to business districts’ being re-imagined as liveable, base the concept designs; mixed-use and diverse environments. The • The Design Process | Illustrating the creative continuing transformation of our inner city and collaborative approach undertaken; environment is part of this story, with facilities • Concept Design Schemes | Showcasing the such as the Perth Arena, the City Library, concepts and architectural intent for each of Elizabeth Quay and the Perth Stadium adding the six re-use schemes; diversity, interest and culture to the central city. • Key Considerations | Explaining the technical requirements for an upgrade or conversion, With this development currently underway, there including structure, services, the approvals is no better time to think creatively around the process, and heritage and contamination role that the City’s existing building stock can issues; and play in contributing to Perth’s future. • Cost and Programmes | Summarising the Sheffield House, Perth - The adaptive re-use of a largely derelict heritage building, located in the Hay Street cost per square metre upgrade for each Mall, to create a low-energy, high-performance workplace. With over 60% of Perth’s office buildings design scheme and an indicative construction graded as C-Grade properties and a vacancy timeframe. rate of 25.7%, the City’s C-Grade office stock represents an opportunity of just under The report is also supplemented through a range 340,000sqm of vacant or underutilised space. of technical appendices, including more detailed From vertical medical facilities to student considerations and quantity surveyor cost accommodation and new format retail offerings, estimates for each of the concepts. the future use of our existing C-Grade building stock has the potential to respond to emerging market opportunities, whilst adding people, life and vitality to the inner city. This case study explores six concept design City of Perth / C-Grade Office Study 5 Overview 5 Using this guide Commercial Context City of Perth / C-Grade Office Study 6 2 Commercial Context Perth is a resources city. Iron ore, natural gas world with less than 5,000 sqm available across and gold have brought people, businesses and the Perth CBD and West Perth. By early 2017, investment to our city for over 100 years. over 500,000 sqm is vacant in the Perth CBD and West Perth. Our reliance on the resources sector (and to a lesser extent, the agricultural sector) to drive In response to the resources boom, Perth economic growth has seen the State locked into underwent an office development boom. Between the cycles of boom and bust. the 2004 completion of Woodside Plaza and the 2016 completion of the David Malcolm Centre, As our city continues to grow, measures office developments have grown the Perth CBD 565 Hay Street, Perth - Central Park, Perth - 588 Hay Street, Perth - are needed to improve Western Australia’s office market by 30%. Developments such as a 1960s office block stripped a refurbished ground plane A 1960s building re-developed economic diversity. Kings Square, Raine Square and 140 William back to its skeleton and rede- restores the tower’s identity as as high-performance, open-plan signed as A-grade office space. a premium office building. commercial office space. Street represent new development precincts away Similar resource-led cities in other parts of the from the traditional St. Georges Terrace address. world, such as Edmonton in Canada and Cape Town in South Africa, have successfully become This growth was driven by demand created by centres for technology and education, assisted major resources companies, their suppliers and by city and/or state-sponsored innovation hubs. the record growth of the state economy. At the Attracting international companies and foreign peak of the boom in 2012, 70% of occupied students, and supporting new business models, office space in the Perth CBD was occupied are suggested strategies for a more sustainable by resources companies, firms servicing the Perth. resources industry and the Government. Since then, as construction of new projects has been Locally, the biggest recent growth in leasing completed and new supplies of iron ore and LNG has been for technology, shared workspaces, have come on stream, office space occupied by education and consumer medical (eg. dentist, iron ore companies and engineering firms has emergency, GP).