BHP anchors itself into Perth's rising office market

The 10-year commitment BHP signed onto in 2008; the deal that kick-started the imaginative transformation of a beautifully-positioned block on a rise above the Swan River and just below St Georges Terrace; the block that had been owned by identities like Alan Bond, Kerry Packer, Multiplex and ultimately Brookfield Properties, was, back then, the biggest leasing deal ever struck in Perth’s history. 

Just this month, BHP re-signed to stay put for another 15 years as occupant of 41,000 square metres of office space in Tower One. 

And although some of the retail and restaurant ground-level tenancies in the pedestrian cut-through lanes and plazas of Brookfield Place are still evidently struggling, Brookfield Properties is carolling that it is “thrilled to continue a great long-term partnership” with the mining behemoth until at least 2037.

Brookfield Properties executive vice president Danny Poljak said as part of the renewal of tenancy, Brookfield plans to “undertake a significant re-investment into both the tower and the precinct.” 

He says the upgrading that will take about two and a half years “will create some flex space to accommodate BHP’s on-demand needs while also servicing our broader tenant community”.

Part of that upgrade will recall Indigenous artist partners from the Whadjuk community, Barry McGuire and Carol Innes, who have worked with Brookfield on other Perth projects, and who will add their creative mark to the precinct’s refurbishment.

This new lease deal being nationally publicised shows, according to CBRE director and long-time Perth commercial property expert Andrew Denny, “what a great achievement it is to have such a big tenant recommitting themselves to that building.”

Denny says that Tower One and its intriguing surrounds – through which pedestrians can transit from the financial and mining businesses on St Georges Terrace to the transport hub at Elizabeth Quay – was one of the most transformative developments for Perth’s CBD.   

Before it opened in 2012, he says, “everyone went home at 5pm. But this development had good restaurants and good bars” and made an amazing difference to the way the city was used. 

The tower’s pending revamp should also help further the revitalisation efforts in the city centre that, like east coast capitals, was deserted by office workers during the first two years of COVID. 

Denny acknowledges that while outside of the retail buzz of the Hay Street Mall, the pavement-fronting shop premises of Perth still appear proportionately empty – “that sector of the market is doing it tough” – but on the floors above, office vacancy rates keep diminishing.

In 2018, the commercial office vacancy rate was 22.5 per cent. “Today it is 15.8 per cent and a lot of tenancies are expanding, they’re taking up more space. Brookfield Place is 99 per cent full,” says Denny, who manages a number of floors in the precinct.

With a metropolitan population of 2.09 million, Perth never appears congested. And although it has many of the powerhouse companies driving the Australian economy, its commercial rental rates are fractional in comparison to those in Sydney and Melbourne.

In Sydney, the median square metre rental is $1000. In Perth, it’s about $400 per square metre “and you can get cheaper than that”, says Denny.

While not of the scale of the BHP leasing, Denny’s CBRE agency is currently advertising two full floors in the Brookfield Place part of town. “But they are a very different product.” 

Featuring “high ceilings, different window treatments and character heritage”, the 50-square-metre office spaces within the historic Royal Insurance Building on the St Georges Terrace frontage “are not your standard office product and they appeal to certain types of tenants”.