Tide turns for spec B-grade office
It has taken four years but leasing agents JLL and Colliers International have pulled off what some would consider an extraordinary feat in Perth’s truculent office leasing market — a fully leased B-grade office building in the city.
The 7175sqm, 11-storey 5 Mill Street tower, the middle in the three-building Mill Green complex, has now been fully “restocked”, the agents said.
GDI Property Group, the owner had invested in a comprehensive upgrade of the complex, and was one of the first CBD landlords to break up floor plates and use speculative fitouts to open up the building to smaller tenants.
The strategy has paid off, with the last level-six space leased to IT company Prime Q.
This was in a market in which B-grade vacancy rose to 30.8 per cent in July, compared with 19.4 per cent in A-grade and 11.7 per cent in premium grades.
JLL WA head of office leasing Nick Van Helden said the building had been a star performer and a B-grade success story.
Colliers International’s Dustin May said the building had gone from having multi-floor tenants and some split floors to housing 33 tenants.
“That includes smaller tenants from West Perth and (tenants) from north and south of the river,” Mr May said.
JLL’s Warren Wright said the landlord’s commitment to a series of speculative fit-outs, thought to have cost anywhere from $1 million to $1.5 million, had proved attractive to smaller tenants.
Colliers International’s Daniel Taylor said the turnkey fit-outs had particular appeal for tenants seeking spaces as small as 80sqm.
“The generic fit-outs appeal to a range of occupiers and over time we expect this upfront investment will deliver higher rent returns and capital valuations,” Mr Taylor said.
Colliers International will apply that strategy to Mill Green’s 197 St Georges Terrace tower, where its first 250sqm speculative fit-out, on level nine was leased within two weeks of being finished.
Colliers International’s Dustin May and Daniel Taylor at 5 Mill Street.