AMP Capital has all but filled a Perth office tower at 140 St Georges Terrace after a run of leasing deals which will buoy hopes a recovery in the West Australian market is gaining traction.
The leasing streak has cut vacancy in the 29,929-square-metre tower to just 0.7 per cent, down from 30 per cent at the start of 2019.
Among those tenants signing up for space, Dampier Bunbury Natural Gas Pipeline with 2200 square metres and AngloGold Ashanti with 2110 square metres have committed to two whole floors each on long-term leases.
Net face rents on some recent deals in the prominent tower were struck at $640 per square metre, while incentives on some deals have tightened from as much as 50 per cent to around 40 per cent, according to market sources.
Other tenants taking space in the St Georges Terrace tower include Downer Group, Viridian Advisory, and Talent International.
The run of leasing deals – 12 new tenants took out 8899 square metres in total – were brokered by CBRE’s Andrew Denny and Luke Bray.
Mr Denny said the success at 140 St Georges Terrace pointed to a broader rebound gathering pace in the Perth market.
“We’ve had five consecutive halves of falling vacancy. Yes, it has been slow but it has been steady and there is more to come,” he told The Australian Financial Review.
“This year is the first year we’ve seen some face rent increases on around seven buildings. We’ve also seen some reductions in incentive levels. They’ve been very much at the top end of the market.”
Perth’s vacancy rate in July was at 18.4 per cent, according to Property Council of Australia figures.
Investors have been buying into the Perth office market in expectation of a sustained recovery. Fund managers Warrington Property, Primewest, Corval and Quintessential Equity have made deals in recent months.
In September, Centuria Capital’s Metropolitan REIT acquired William Square in Northbridge for $189.5 million on a 6.4 per cent cap rate from Perth-based syndicator Warrington Property which held the asset in partnership with Goldman Sachs.
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