Tide turns for spec B-grade of­fice

The West Australian - - PROPERTY - He­len Shield

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.

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