Healthy buildings at the forefront of WA’s office market recovery
Shane Quinn, Executive Chairman & Co-founder Quintessential Equity
The pandemic has put the future of the office in the spotlight like never before. The truth is, we don’t know the full impact it will have.
Whilst the office is certainly not dead, I think the way we approach workplaces is going to change for the better.
It’s no secret that leasing space in the coming years is going to be tough. After several years of reduced sentiment in Perth, the office market had started to recover just before Covid-19 hit. Currently vacancy sits at 19.5 per cent.
Perth is quite insulated compared to other Australian office markets. Coming off a low base, the impact on the city’s office market is likely to only affect prices in the short term before kicking back into recovery.
However, let’s address the broader story. While Covid-19 presents a complex challenge on a business and industry scale, there’s an opportunity to instil a positive long-lasting legacy.
From a landlord’s point of view, what does that mean? It comes down to the health of a building – both environmentally and financially.
For starters, green and sustainable buildings are going to be at the forefront of the post-Covid world. Businesses and workforces want to feel safe when they return to the office.
Secondly, business relationships and trust is more important than ever. As a landlord, we are committed to our tenants – we know that we need to support them so they can focus on running their own businesses. By doing this, we not only attract and retain quality tenants (we are very proud of our tenant retention rate of 95 per cent), but we protect the asset financially too.
What does this look like in practice?
Quintessential Equity recently completed a $5 million refurbishment on an eight-level city tower, located at 8 St Georges Terrace in Perth’s CBD.
In an effort to support businesses through the financial impact of Covid-19, we’re offering prospective tenants a year’s free rent. After a year, tenants will have the option to sign a four-year lease.
On top of that we are offering new tenants a bespoke office fit-out – valued between $150,000 to $450,000, depending on the size of the tenancy.
The opportunity is rare. A year’s free rent could save a business from $80,000 to $240,000 per annum. In reality it could help to save businsses 5 to 20 per cent of their overhead costs.
While this is a significant capital commitment from our end, the way we see it is if we’re able to support businesses through this financially challenging time brought on by Covid-19, then we will. In return, we hope to build trust by providing an exceptional experience that will lead to a long term relationship with our tenants.
As a landlord, we want to support the business community and it’s times like these where strong relationships are built.
With a focus on tenant wellbeing, the refurbishment includes a new ground floor and on-floor lobbies, complimentary conference centre, end-of-trip facilities, new lifts and upgrades to the overall design and functionality throughout. The amenities and finishes are now of an A-grade to premium standard.
Final mechanical regeneration works have also reecntly completed and are aimed at bringing the building’s NABERS base building energy rating to a minimum 4.5 Stars, while reducing running costs. Upgrades were made to all bathroom areas, including modern fixtures and water and electricity saving facilities.
If you can make a building run efficiently, reliably and comfortably, then you’re going to attract and retain tenants. Added to that, we’re offering a very flexible financial arrangement which allows our tenants to focus on their own business during these challenging times.
When we look at commercial property across Australia, every market is different. As a landlord, we are cognisant of the needs and demands of every state and city we operate. We must pivot as an industry to future-proof buildings.
Post Covid-19, I think we’ll see workforces continue to be more agile, with technology allowing that. However, there is an opportunity for the office sector to reinvent itself – to create an attraction and draw people in.
There’ll be a reset going forward for better offices with sustainable, healthy and smart building design.
8 St Georges Terrace comprises 4,587 square metres of net lettable area, catering to tenants looking for 200 to 600 square metres of office space. It is currenlty 86 per cent vacant.
For more information about 8 St Georges Terrace, visit www.8stgeorges.com.au
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