The Department of Mines is planning to consolidate its office space from four buildings to a new 10-storey tower in Northbridge, in a move that would cost taxpayers millions of dollars. 

The department is currently spread between Perth, East Perth and Cannington, with plans to move in the works for several years. 

The state government has appointed Urban Flux, which shares the same directors as Devwest Group, to develop a 10-storey tower at 80 Francis Street, currently occupied by a European Foods warehouse. 

The deal hinges on the sale of the property, which is still in the hands of The Re Store family, to a buyer with significant capital. 

An information memorandum obtained by Business News revealed that the state government has committed to occupying an entire new building, of 20,000 square metres of space. 

The document states that the government’s lease would last at least 15 years, with options to extend for another five years. 

Industry insiders say the rent the government is expected to pay is about $795/sqm. 

With outgoings and car bay revenue, this would equate to a cost to taxpayers of at least $21 million a year.  

An artist’s impression of the proposed 10-storey building in Northbridge. Image: Plus Architecture

Average CBD office rents for A grade properties are about $680/sqm, and a premium grade building such as Brookfield’s Nine The Esplanade is asking for up to $850/sqm. 

For about $495/sqm, the department could occupy space in the former Hyatt precinct that Fortescue recently vacated. 

It could also move into QV1, where Western Power is currently eyeing the remaining 20,000sqm of space, for less than the Northbridge property, experts say. 

It is estimated that the end value of the Francis Street project would be about $300 million. 

In terms of land value, a comparable property sale is The Re Store’s recent divestment of 77 Francis Street for $10.62 million.

Business News understands the construction cost of the Francis Street property has not been finalised, nor a builder appointed. 

The aim is to gain development approval in the third quarter of this year, the building to reach practical completion in December 2027, fit-out in 2028 and the department to move in in 2029. 

Knight Frank Australia would not comment on the specifics of the deal, but it is understood that the agency is negotiating with interested parties on the property. 

Devwest declined to comment, due to confidentiality around the process. 

Housing and Works Minister John Carey said the Department of Housing and Works went out to market on the department’s relocation in May 2023, via an expressions of interest process. 

“This accommodation initiative remains ongoing, with DHW working with the preferred respondent from the EOI process,” he said. 

“Due to confidentiality provisions, we are unable to provide further details.”

Under recent machinery of government changes, the Department of Energy, Mines, Industry Regulation and Safety recently split into the Department of Local Government, Industry Regulation and Safety, and the Department of Mines, Petroleum and Exploration.   

The Francis Street site today. Photo: Michael O’Brien 

History

The department reportedly previously selected a site on Wellington Street to relocate its offices to a new development. 

According to a trade publication, DEMIRS selected 725 Wellington Street, owned by Singaporean group Bonvests Holdings, to relocate their offices to one central location. 

A proposed three-tower development designed by Woods Bagot on the site, to be dubbed Murray Tower, is yet to go ahead. 

According to the property publication, the estimated rental of about $600/sqm was “not necessarily … economically viable to construct the proposed new development.” 

Industry sources have raised similar concerns about the Francis Street asset, with some saying that the feasibilities could be difficult to stack up in an inflationary environment. 

Last year it was revealed that the government spent $6.4 million on a failed bid to relocate the Department of Primary Industries and Regional Development from South Perth to a new building at Murdoch. 

The $350 million Murdoch project was announced in 2022, but was cancelled last year. 

It is understood that the government is still looking for land to develop new offices for the agriculture department.