Posted on Financial Review
Office landlord Dexus has struck an 8495-square-metre leasing deal with the federal government at its King Square precinct in the centre of Perth amid a “steady improvement” in the Western Australian capital’s commercial property market.
As well, international engineering firm BG&E has taken 2448 sq m and mutual bank P&N 3248 sq m bringing the total to over 14,000 sq m of space leased at 556 Wellington Street – known as Kings Square 1 – the tallest of three office towers (at 19 levels) owned by Dexus.
With these deals, occupancy has risen to 89.7 per cent at Kings Square, which provides in excess of 50,000 sq m of office and retail space, well above the current occupancy rate for the Perth CBD of 78 per cent.
“With Perth undergoing a mining employment recovery, we are seeing more optimism from the broader business community wanting to invest in their workplace to attract and retain talent,” said Dexus portfolio manager, Tim McGuane.
The leasing deals at Kings Square were negotiated by Digby Sutherland, joint managing director of Sheffield Property.
According to its most recent Australian Real Estate Quarterly Review, prime net effective rents in Perth grew 4.1 per cent over the past year. while incentives were stable at 48 per cent.
“Rental growth is expected to improve mildly as market conditions slowly recover in the absence of major new supply,” Dexus said.
Its report said the vacancy rate increased to 22 per cent, largely due to backfill associated with Woodside’s move into the recently completed Capital Square. “Vacancy rates are likely to reduce further in the major markets over the year ahead,” Dexus said.
Mr Sutherland said the deals struck by Dexus continued the trend of “companies relocating from fringe CBD and suburban locations to Kings Square and setting themselves for better times ahead by relocating to prime buildings”.
Kings Square is part of the Perth City Link precinct that reconnects the CBD to Northbridge following the King Street extension which was completed in early 2018.
Amenities at 556 Wellington Street include end-of-trip facilities, access to a gym and childcare centre, public open space, retail offerings and convenient transport connections.