Port Kennedy Central Shopping Centre 397 Warnbro South Avenue
Image: Supplied.
  • Nine The Esplanade to be created by JV of Brookfield and Cbus
  • Perth office market best in the country
  • Neighbourhood shopping centre to expect over $20M

Perth is set to see a new office building come to Elizabeth Quay, with Brookfield and Cbus joining forces to create Nine The Esplanade, a Port Kennedy shopping centre has hit the market, and the Perth office market has been found to be the best in the country.

New office for Elizabeth Quay

A joint venture of Cbus and Brookfield will see the quay home to another high-quality mixed-use development precinct.

Located at Lot 6, and to be known as Nine The Esplanade, the property will be a 19-storey Premium Grade office tower with floorplates averaging 1,870 square metres. The new office will also be home to uninterrupted river views, state-of-the-art end-of-trip facilities, excellent transport links and dynamic tenant amenity, including a cafe, business lounge, conferencing facilities and waterfront dining.

It also will be located next door to another Brookfield development One The Esplanade which recently reached practical completion.

Brookfield Managing Partner and Head of Real Estate in Australia Sophie Fallman said: “Perth is experiencing the strongest market conditions since the 2011 resources boom. The global flight-to-quality thematic for real estate is playing out in the Perth office sector, resulting in strong demand for highly sustainable and amenitised Premium Grade assets.

“We have strong conviction in the Perth market and are pleased to be developing Nine The Esplanade with our joint venture partner, Cbus Property. Launching this prime development is a ringing endorsement of Perth, where the supply fundamentals are the best they have been in some time, and of our world-leading development capability.”

Cbus Property’s Chief Executive Officer, Adrian Pozzo, said that Nine Elizabeth Quay presented “an invaluable opportunity to re-enter the Perth office market following the success of 140 William Street 10 years ago”

“In recognising the prime location of the site in the heart of the landmark Elizabeth Quay precinct, we seized the opportunity to partner with Brookfield to deliver another industry leading commercial office building for Perth

“Nine The Esplanade will join Cbus Property’s $6 billion carbon-neutral office portfolio across Australia, reinforcing our aspiration to deliver the most sustainable office portfolio in the country.”

There is enormous demand for premium office space in Perth, with vacancy at 6.6 per cent as of January 2023, according to Colliers.

Ms Fallman added: “Brookfield was able to achieve 100 per cent office and retail leasing commitments at our newly completed One The Esplanade, which underscores the strength in demand for space that is additive to the workplace experience.”

Perth office market best in the country

Knight Frank‘s Perth CBD Office Market Report has found that the Perth CBD office market has seen the highest positive absorption as a percentage of total stock of any capital city CBD over the past two years.

Sustained tenant demand is one of the drivers, with the report also finding the vacancy rate in the western capital’s CBD office market likely to decline after this year following new supply coming online in 2023.

Knight Frank Chief Economist Ben Burston said the Perth CBD recorded a high level of net absorption over the past two years, reflecting the sustained strength of economic and employment growth.

“There was positive absorption of more than 6,000 square metres in the second half of 2022, bringing the total over the past two years to 87,000 square metres,” he said.

“This reflects 4.8% of total stock; the highest of any major CBD over the past two years.”

The report found absorption of B grade (41,000 square metres) and A grade (37,000 square metres) space has been particularly strong over the past two years.

“The resilience of B grade is in contrast with other major cities which have seen a more pronounced concentration of absorption in Premium and A grade,” said Mr Burston

The report found that prime net face rents rose by 2.2% over H2 2022 to average $651 per square metre, taking them 3.9% higher over the year, while average prime incentives reduced from 49.6% to 48.8%.

It was also noted that rental growth was even stronger in the secondary market, where net face rents rose by 3.9% over the six months to January to be 5.6% higher over the year.

Port Kennedy Central on the market

Located at 397 Warnbro Sound Avenue in Port Kennedy, the neighbourhood shopping centre is expecting to fetch in the mid $20 million’s and is being sold by a private family.

Including 7,998 square metres of gross lettable area on a prime site of 1.9 hectares, it has 364 car parks, is anchored by an IGA and other tenants include Cellarbrations, Gold’s Gym, Port Kennedy Pharmacy, Kennedy Bay Medical Centre, and Rental Management Australia.

397 Warnbro South Avenue, Port Kennedy
Image: Supplied.

The estimated fully leased net income is $1,577,706 per annum, with the WALE by income being 4.7 years.

Knight Frank’s Cory Dell’Olio said the shopping centre was expected to generate strong investor interest, with one of the key drawcards being its growing patronage.

“Port Kennedy Central is in a major growth area, so the catchment base will continue to increase,” he said.

“It is also in a highly visible and prominent corner location, and situated on the major arterial of Warnbro South Avenue, with around 15,000 vehicles passing by every day.

“As well as being close to the Kennedy Bay development, which it will directly benefit from, the neighbourhood centre is also close to several schools and the HMAS Stirling naval base at Garden Island which is set for a major upgrade – another factor that will underpin population growth within the area.”

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