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State Faces $6m Rent Bill for Empty CBD Offices

Many are questioning the plan to move government offices to Joondalup.

With the State Government's financial woes continuing, many are questioning their plan to move some government departments to new offices in Joondalup.

With rents in the CBD plummeting and CPSU/CSA members campaigning to stay - many believe the best decision is to remain in the city.

THE WEST AUSTRALIAN:

State faces $6m rent bill for empty offices

Daniel Emerson

Monday, 3 July 2017

Taxpayers are set to fork out more than $6 million to rent five empty floors of a CBD office building for a year under hotly contested plans to move 800 public servants to Joondalup.

Under a 2013 election policy to decentralise State agencies, the Barnett government last year announced the departments of Environment Regulation and Water and the Office of the Environmental Protection Authority would move to the northern suburbs hub in “early 2019”.

The State signed an agreement to lease the 9600sqm, eight-storey office on the corner of Shenton Avenue and Davidson Terrace for 15 years with two five-year options from property syndicator Primewest, which would also develop the project.

But Paul Collins, leasing agent at the agencies’ current premises The Atrium on St Georges Terrace, said the State’s lease did not expire until about a year later on February 29, 2020.

The CBD property market was sluggish.

“If a replacement tenant could not be found, the State would be required to meet the full terms of its lease over 10,923sqm, including rent, outgoings, 65 car bay charges and the Perth parking levy totalling more than $6.3 million for a year,” Mr Collins said.

He said he had been keen to submit a proposal to retain the tenancy but was not provided the opportunity.

“We think our proposal wasn’t sought because it would have been financially superior, making it difficult for them to justify the Joondalup deal,” Mr Collins said.

Rent at The Atrium is currently $320/sqm. The West Australian has been told it will be $470/sqm at the Primewest building from 2020.

Community and Public Sector Union/Civil Service Association secretary Toni Walkington said many of the public servants did not want to move and she had begun lobbying the State Government against it.

Finance Minister Ben Wyatt, who has accused the former government of failing to fund the $17.6 million move, said it was a “bad deal” but the 15-year Primewest lease was legally binding.

Opposition Leader Mike Nahan said an analysis at the time factored in potential costs associated with early termination of The Atrium lease.

Despite The Atrium’s potential counter-offer, he insisted the move to Joondalup would still be cheaper in the long run.

“Leasing agents for The Atrium were not requested to submit a proposal because the government was committed to supporting the growth of urban office precincts and the savings required to reverse the financial advantage of the move to Joondalup were not considered attainable,” he said.

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