Suburban landlords in Perth wooing tenants with ready-to-go offices

Colliers International office leasing executive Antonio Trimboli said the fitout trend, which had been occurring in the CBD for the past few years, had spread to the suburban market with landlords investing in office fitouts to attract tenants.

“The consensus in the suburban market is that tenants are still gravitating towards options which are fitted out and furnished,” he said.

“Smaller tenants have a tendency to leave their search for new office space a lot later than larger occupiers and this further emphasises the need for landlords to be proactive, rather than reactive.

“We’ve had a number of instances over the past six months where tenants have chosen to move into tenancies that are fitted and ready to go, despite the building being a lower quality than other non-fitted options.

“Tenancies with existing fitouts not only offer greater convenience to tenants, but also allow them to use all of the incentive offered towards rental abatement.”

JLL office leasing WA director Warren Wright said vacancy in fringe areas was expected to remain elevated due to the competition from the CBD market.

“Suburban tenants can now relocate to the CBD for less than they were previously paying in their suburban location and secure higher-quality office space. This is particularly advantageous for tenants wanting to lift their company profile,” he said.

“Certain tenants still prefer a suburban location and this is mainly driven by price, ease of access and the availability of tenant and public car parking for staff and clients.

“The price of suburban office accommodation has reduced in line with the competition from the CBD and the incentives have risen. In some suburban locations the outgoings cost will also be less than the CBD.”

According to Knight Frank, West Perth and fringe CBD office leasing markets will continue their recovery into 2018 and beyond, due to a commitment by landlords to improve their facilities.

Overall office vacancy levels in Subiaco, West Perth and Nedlands have followed a gradual downward trend in recent months and have remained stable at 30 to 35 per cent of lease terms, said Knight Frank.

Knight Frank office leasing WA associate director Sallese Wilmot-Barr said the fringe markets had been supported by renewed activity at the lower end of the resource sector, an increasingly limited availability of alternative options in the CBD and landlords adding value to their buildings.

She said an increasing number of older buildings in the fringe CBD had either been fully or partially refurbished, with many following the CBD trend and tenant-led demand for quality end-of-trip facilities.

“Proactive building owners have improved their offering significantly in terms of facilities and this has led to rents and incentive levels staying relatively stable and more take-up of vacant space,” Mrs Wilmot-Barr said.

“At the same time the traditional West Perth and fringe tenants like junior resource companies have started to expand again off some slightly more positive news in that sector over the last 12 months.

“We are seeing particularly strong interest in West Perth and Subiaco, particularly for tenancies in the 150- to 300-square-metre range.”

Colliers International’s Metro Office Research Forecast Report for the first half of 2018, examined new buildings greater than 1000 square metres and found during 2017, only 25,727 square metres of new office space was added to the suburban office market with two projects – 25 Rowe Avenue, Rivervale and 5 Milldale Way, Mirrabooka, dominating the additions.

The report also found 41,520 square metres of office space was under construction, with about half set to be delivered in 2018, with the completion of projects in Subiaco, Joondalup and at 16 Ventnor Avenue in West Perth, where Colliers has been appointed to lease 1500 square metres of office space in a mixed-use project.

The remaining 20,000 square metres is in Fremantle and expected to be complete in 2020.

Fitted and furnished space at 102 James Street, Northbridge, Perth.

A Northbridge office combining a traditional fitout with break-out spaces from an adjoining, former apartment is among a new listing tailored to appeal to tenants looking for space in Perth’s fringe market.

The top-floor space at 102 James Street comprises 160 square metres, where new fitouts have been installed in the boardroom and at 16 workstations.

Colliers International office leasing executive Antonio Trimboli said the rear part of the floor was once a 263-square-metre apartment and includes a kitchen and dining area, as well as three bedrooms, which can be used as offices, and an al fresco area.

“This fitout has delivered a flexible office suite that is closer to the CBD centre than many buildings in Perth, and is now ready to be occupied,” he said.

“Landlords are investing in office fitouts to attract tenants and tenants are opting for the convenience of a plug-and-play office.”

Mr Trimboli said the fitout was expected to appeal to tenants wanting traditional work spaces and informal areas where staff could collaborate.

The James Street building has CBD and Yagan Square views.