AI companies drive demand for Sydney and Melbourne premium office towers
AI companies are fast moving in on Sydney and Melbourne’s best office spaces, simultaneously pushing up the bar for prime-grade space.
The surge in tech occupancies is centred in Sydney, where several major international companies, including ServiceNow, Databricks and BrainChip Holdings, have set up their Australian headquarters.
Australian AI companies Wise Tech Global, Nuix and DroneShield are also based in Sydney, while Firmus and AirWallex are in Melbourne.
AI occupiers help absorb prime office vacancy
The surge of profitable, rapidly expanding AI companies has helped reduce office vacancy rates in prime buildings while boosting demand for ultra-luxe spaces, says Joanne Henderson, national director of research at Colliers.
“We probably didn’t see it as much last year, but we have started to see it probably progress or gather pace through this year,” she says.
“There are a few companies that are coming out of flex space, or they’re expanding their office footprint, and they’re taking up some of the vacancy in the market.
“So at the moment that’s a positive impact on net demand, but it’s particularly focused on Sydney at the moment.”
Premium workplaces become a recruitment advantage
The expansion of some AI companies is moving so quickly that they are snapping up spaces with room to accommodate more staff in the future, and they are also leveraging deluxe offices to woo new talent, says Cameron Douglas-Perrine, CBRE senior research analyst.
“AI is accelerating the importance of attracting and retaining skilled workers, which, in turn, is raising the minimum benchmark for what occupiers consider a viable office asset,” he says.
“Location, quality, amenity and workplace experience are becoming increasingly critical, and we expect that trend to intensify over the coming decade.”
Databricks bets on Sydney growth with new headquarters
Databricks, a private US AI software company, first entered Sydney in 2020 and has since grown exponentially. Early next year it will open its new ANZ headquarters at 400 George Street in the city.
Their offices will span about 2000 square metres – enough room for the extra 150 roles it expects to create in the new year. The company, which is widely tipped to float on the ASX in the near future, is investing $US300 million ($416 million) in its Australia and New Zealand operations over the next three years.
“For us, one of the biggest considerations is having room to grow,” says Chris Koh, Databricks’ real estate and workplace manager, Australia-Pacific and Japan. “We’re growing quickly in the region, so we want spaces that can support the team we have today while giving us the flexibility to add more people over time without having to move again.
“We also think a lot about how the space will actually be used. That means having a good mix of areas for focused work and collaboration, flexible meeting rooms and private spaces for calls, as well as dedicated areas where we can bring customers and partners together for training and events.
“Our new ANZ headquarters in Sydney, for example, will include dedicated training facilities as part of our commitment to train 100,000 people across the region over the next five years.”
The building at 400 George Street, which is managed by Mirvac, has just undergone a major refurbishment that includes new facilities such as a lobby with concierge services, cafe, shared meeting spaces, wellness facility and upgraded end-of-trip amenities. The renovation also added a new through-site link that improves pedestrian flow and connectivity between George Street, Sydney Arcade and Pitt Street Mall.
Melbourne’s newest office towers attract digital-economy tenants
In Melbourne, property investment and funds management company GPT Group opened its $555 million office building at 51 Flinders Lane at the start of September. AI infrastructure company Firmus will occupy the entire level 14, joining other digital giants at the address, including hyperscale data centre brand AirTrunk.
Two buildings make up 51 Flinders Lane – a 14-level north tower and 39-level south tower. Ground-floor hospitality tenancies will progressively open from later this year and be anchored by chef Alejandro Saravia’s flagship restaurant, Masia
The tenancy mix at the upmarket building reflects the next phase of economic growth, Brown says.
“We continue to see strong demand from businesses seeking highly connected, amenity-rich workplaces in premium CBD locations, particularly from sectors where connectivity, collaboration and access to talent are critical to long-term growth,” he says.
