City Link revives old fortunes
The urban renewal at Perth City Link is set to boost market interest in the cluster of heritage-listed buildings in the nearby north-west precinct and drive up capital values in the area.
JLL managing director John Williams said capital growth in the precinct next to Kings Square and the bigger Perth City Link - the area bounded by Hay, Milligan, Wellington and Williams streets - would occur over the next three to five years.
While the benefits of the Perth City Link and Kings Square have been well documented, Mr Williams said there had been little discussion about how the projects would affect change in the city's older precincts.
"The pocket between St Georges Terrace and Wellington Street, and abutting the Perth City Link project area, contains the highest concentration of heritage-listed buildings in the Perth CBD," he said.
"Due to its position, the area will provide a crucial thoroughfare, connecting the office district on St Georges Terrace and Northbridge's cultural and entertainment precincts."
According to Mr Williams, increased pedestrian traffic through the north-west precinct would generate private interest and create business opportunities for retail and dining.
"Ironically in this development- driven CBD economy, it will be the absence of development and large, developable land holdings in this area that will prove a significant source of value," he said.
"Sites in this precinct are typically smaller, below 1000sqm with many less than 500sqm, with fragmented ownership, so it has been difficult for developers to amalgamate sites and facilitate economic development on a large scale. This has involuntarily assisted the preservation of many of the area's heritage buildings, such as those in King and Queen Streets, as well as the Mortlock, Rechabite and Bungalow buildings on Hay Street, to name just a few."
Many of the precinct's 19th and early 20th century buildings were originally constructed for warehousing and manufacturing applications, a built form that has in the past proved difficult to repurpose and subsequently, difficult to let.
Because of low market rent levels, speculative refurbishment on most of the heritage buildings has not been viable and many of the buildings' basements and upper levels are not well used.
"It has only been in the past 10 to 15 years that some sympathetic refurbishment has been actioned, producing some unique refurbishment of office and living spaces such as the Country Road building on Murray Street, and the Butterworth buildings on Hay Street," Mr Williams said.
When the rejuvenation does begin, he said the area would be enhanced by buildings that honour traditional built form and the character and identity of the streets.
"As progress on the City Link development ramps up and the first buildings in Kings Square are completed and occupied, so too will the nearby area's appeal to occupiers," he said.
In the next three to five years, Mr Williams said stronger demand and higher rents would justify more refurbishments and help to make the area more desirable. He said the increase in property values would be a direct consequence of the increased levels of interest from occupiers.
"The end result will be an increase in potential net income, which when capitalised, will increase values."
