Bonuses roll on for Perth office tenants

Tenants in Perth’s embattled office leasing market are scoring big as landlords go to extraordinary lengths to win them over.

With office vacancy rates at historic highs and conditions continuing to favour tenants, landlords are completing speculative fitouts of their offices in a bid to make them more attractive to potential users.

In addition to the substantial leasing incentives already on offer, CBRE office leasing director Lachlan Lewis says a number of prominent office landlords are providing additional lures by fully fitting out their vacant buildings.

Size matters: Office landlords offer unique conditions

Among the fitouts is a fully fitted and furnished 215sqm space recently leased for three years by mining company Mirabela Nickel at London House on St Georges Terrace.

“Whilst edging on the riskier side of innovative initiatives, the jury is clearly out with strong and genuine interest from tenants in these newly fitted, plug in and play opportunities,” Lewis says.

“This deal, which is an early example of the trend, triggered the landlord to roll out a number of other speculative fitouts in London House and Parmelia House.”

“Whilst Mirabela had an inclination to relocate out of the city and into West Perth, the opportunity at London House was too good to refuse.”

Whilst edging on the riskier side of innovative initiatives, the jury is clearly out with strong and genuine interest from tenants in these newly fitted, plug in and play opportunities

The trend of pre-furnishing offices could continue as the Perth leasing market fights to weather the downturn in the resources sector.

Perth’s office vacancy rate was the highest in Australia at 16.6% in the six months to July, with some reports putting vacancies in Perth and Brisbane at beyond 20%.

The national vacancy rate over the same period sat at 10.3%, with Sydney the best-performing city at 6.3%.

But Lewis says the Mirabela Nickel deal and other recent leases are a sign that there is still life in the market if landlords are prepared to offer something extra.

Parmelia House is one of a number of Perth buildings to be fitted out speculatively

“The success of this deal was the catalyst for three additional speculative fitouts across the (London House and Parmelia House buildings), of which one is now leased and the other two are in advanced stages of dealing.”

Another prominent Perth CBD building at 45 St Georges Terrace has also been subject to recent speculative fitouts.

“Aside from the major transaction in 2013, securing Citi Pacific Mining over 3250sqm across three floors, the landlord last month delivered another floor of 1086sqm of new, fully fitted and furnished office space,” Lewis says.

“Within the space of four weeks since delivering this new floor we have three very real prospects, all with live terms on the table.”