In Business

Western Australia Minister Assisting the Treasurer Bill Marmion

Government Targets Savings In Office Accommodation Costs

Victor P Taffa

Western Australia Minister Assisting the Treasurer Bill Marmion has announced a new ‘master planning’ approach to the planning and procurement of future State Government office space, with the potential to save between $20-25 Million a year by 2015.

Mr. Marmion said more than $220 Million per year was currently spent on leasing and managing office accommodation for General Government Sector agencies.

“There are opportunities for significant savings, as well as improvements to the efficiency and effectiveness of work environments, by addressing what has been a piece-meal approach to leasing and fit-out.” the Minister said.

“State Government agencies occupy about 360,000 sqm in the Perth central business district, East Perth and West Perth, spread across 148 separate lease agreements, and 96 buildings, and many agencies have staff spread across a number of buildings.”

“A new approach to office accommodation is needed to achieve savings.”

The Minister, whose responsibilities include Government building management and works, said savings would be driven by:

  • Consolidating accommodation into less buildings and taking better advantage of Government’s considerable buying power in negotiating leases;
  • Decentralising about 15-20 % of office accommodation – 60,000 to 80,000 sqm from more expensive Perth CBD leases into metropolitan centres;
  • Reducing the space that is leased per person by standardising office fit-outs from the current 19 sqm to about 15 sqm per person, and sharing facilities, such as reception and meeting rooms, for all the agencies in major office buildings (saving about 20 %).

“This new master planning approach to State Government office accommodation will save the Government between $20-25 Million p.a., when implemented over the next five years.” Mr. Marmion said.

The Minister said a number of immediate actions were proposed.

“Firstly, the State Government will commence the consolidation into fewer buildings by leasing the entire office space available in the 19-storey tower under construction at 140 William Street, Perth.”

“The Government has already pre-committed to lease 23,000 sqm of office accommodation in this new five-star Green-Star rated office building, and it is now proposed to lease the remaining 14,600 sqm of available office space in the tower and the adjacent heritage buildings.”

“When fully occupied, 140 William Street will accommodate approximately 2,500 Government officers from about 10 agencies.  Under the previous approach to fit-out, the building would have accommodated less than 2,000 employees.” the Minister said.

“Secondly, the Department of Treasury and Finance (DTF) will lead decentralisation by example and relocate two of its divisions – Government Procurement; and Building Management and Works – to a new 13,200 sqm office building, the Optima Centre, in Herdsman Business Park by early 2011.”

“These DTF divisions are currently spread across five different buildings in the Perth CBD, West Perth and East Perth.”

“The new Department of Training and Workforce Development will also relocate from East Perth, relocating 880 public servants to the Optima Centre.”

Mr. Marmion said long term trends in lease rates showed CBD rates were typically 30 % higher than those in the Perth metropolitan area.

“On that basis, only those agencies with demonstrable need to be in the Perth CBD should remain there.” the Minister said.

The Minister said the plan would also involve major Government office buildings being established at several other suburban activity centres over the next five years.

“Choosing locations close to a major rail route and the freeway, and ease of access to and from the Perth CBD, make suburban activity centres an attractive location for Government office accommodation hubs.” Mr. Marmion said.

“Apart from the direct savings in Government’s office accommodation costs, this decentralisation will provide a valuable economic stimulus to the development of regional centres in the Perth metropolitan area.”

“It will also have additional benefits to the transport system, as well as improve community access to Government agencies.”

Mr. Marmion said the lease for the Governor Stirling Tower at 197 St George’s Terrace expired in mid-2012, and the additional space at 140 William Street, plus the space at the Optima centre would replace this at much cheaper rates than the alternative of a new lease in St. Georges Terrace.

“To give an indication of what we’ve been able to negotiate, an earlier aborted procurement process for replacing the current lease in Governor Stirling Tower with a new lease in St Georges Terrace would have resulted in a cost of about $780 per sqm, whereas the new leases will average about $520 per sqm.” the Minister said.

“As part of the master plan, two major Government-owned buildings Dumas House in West Perth and Albert Facey House in Forrest Place will be retained and refitted.”

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