This article is from the Australian Property Journal archive
OIL and gas giant Chevron has extended and expanded its lease at Perth’s 256 St Georges Tce while it awaits construction of its new headquarters at Elizabeth Quay.
Knight Frank’s joint heads of office leasing, Greg McAlpine and Ian Edwards handled the lease. Chevron will extend its existing lease over 11,828 sqm until December 2023 and align it with a new lease over a further 2,871 sqm, encompassing all of level one of the A-grade building.
It leaves 256 St Georges Tce 84.5% occupied, with only level six and part of level seven still available for lease.
Chevron’s moved into the tower eight years was one of the biggest leasing deals of the year and absorbed more than half of the building’s available space.
McAlpine said the new extension of the lease, totalling of 14,699 sqm, made it one of the biggest office leasing deals of 2019.
Edwards said the reasons why Chevron first moved into the building – proximity to its HQ, large 3,000 sqm floor plates and good amenities for staff – were still relevant.
He said the market for quality A-grade and premium office space had tightened significantly over the last 18 months and Chevron had consolidated to secure the additional space in the same building.
Chevron and Canadian-backed Brookfield signed a deal earlier this year to develop a new $360 million office tower at Perth’s Elizabeth Quay that would become Chevron’s new home.
The Metropolitan Redevelopment Authority granted Chevron Australia development approval for the site in December last year, after Chevron requested to delay the development four years ago due to the mining downturn.
Brookfield will buy the site and development from Chevron, which will be the anchor tenant across 78% of the 29-storey, 54,000 sqm office tower on a 15-year deal. Construction is expected to commence in mid-2020.
Meanwhile, AMP Capital’s 140 St Georges Tce office tower has just been taken to nearly fully leased after entering there with 30% of its space empty, following Dampier Bunbury Natural Gas Pipeline and AngloGold taking two whole floors each on long term leases.
Twelve deals totalling 8,889 sqm have reduced the 29,929 sqm tower’s vacancy rate to just 0.7%.
Perth’s CBD office market rents grew for the first time since 2013 in the June quarter, according to CBRE, while Property Council data shows that after peaking at 22.5% in January 2017, vacancy has now fallen consecutively over the past two years and a half years to now sit at 18.5%.
