Back in vogue: tenants take a shine to CBD heritage buildings

“They can offer cool, creative spaces. As a result of the increasing demand, the owners of these buildings are reinvesting in them, restoring beautiful old timber beams, cleaning up the brickwork, ripping out the false ceilings that were put in to modernise the space and exposing the old high ceilings and everything that makes these buildings distinctive.”

It’s a trend that’s gripping big companies and smaller firms alike. In Sydney, IT giant Atlassian has now moved to 8000-square-metre offices in 341 and 343 George Street, traders Optiver have 6500 square metres at 39 Hunter Street, and payments company Tyro has snapped up 6300 square metres at 155 Clarence Street.

Staff at the Atlassian Offices at 341 George Street, Sydney. Photo: Nic Walker.

Meanwhile, advertising’s McCann Worldwide has 4100 square metres at 30-34 Grosvenor Street and M&C Saatchi operates from 2200 square metres at 99 Macquarie Street, while tech company Dropbox has 2000 square metres at 5 Martin Place. Companies with fewer employees are hot on their trail, bidding to cluster nearby.

“A lot of businesses are now relocating and looking for character buildings,” agrees Tom Buxton, director of office leasing, also at Colliers International. “They all want to attract and retain good staff, and staff want to be in the city, with all the convenience it offers, rather than on the fringe.

“And companies liked the style of building they had on the fringe, so they’re looking for funky work environments and seeking property to emulate the style they know.

“Rents are high as there are limited opportunities for this calibre of building.”

Quite apart from the proximity of all the services of the city, these heritage buildings also offer a certain prestige for tenants, as well as the romanticism of a bygone era, with lofty ceilings, hanging lighting, open ducting and big floorplates.

The companies are happy to pay the rents, too, says Buxton. “Traditionally these older spaces were cheaper than the purpose-built offices but now they’re more on a par,” he says. “There’ve been increases of around 20 per cent and 30 per cent for these buildings in the last couple of years, particularly as there isn’t so much heritage space around.”

The heritage building at 40 King Street, on the corner with Kent Street, for example, was completely refurbished three to four years ago. Before that, rents were $550 to $650 per square metre gross. Just after the refurb, they went up to $850. Recently they hit $975.

It helps that Sydney, following on from Melbourne’s example, is now reactivating old laneways and installing coffee shops and bars into tiny spaces all around, with some of these grand old building’s spaces – once used only for storage – now increasing strongly in value.

In addition, the owners of regular office spaces are now working to try to emulate the heritage style of their forerunners. They’re exposing the old original ceilings and brickwork, and sometimes installing old-style columns to create an older atmosphere, says Fredriksen.

Finding distinctively cutting-edge space is just all-important to these companies, believes Euan Matheson, fellow director of office leasing at Colliers International.

“They’re all looking for something different to attract staff and they really want that wow factor that you can get with heritage buildings,” he says.

“You look at the old woolstore at 24 Hickson Road in Walsh Bay. We had a couple of suites released there and they were taken up so quickly, within a couple of weeks of marketing them. That precinct has a vacancy rate now close to zero most of the time.”

It ‘makes good financial sense’

From the window of his 10th-floor office in an iconic heritage building at Sydney’s Martin Place, financial advisor John D’Alessandri looks out at the clock tower atop the impressive Victorian Italianate Sydney General Post Office, one of the finest buildings in NSW.

John D’Alessandri says being based in a heritage building makes good business sense. Photo: Steven Siewert

It’s a sight he never tires of. “The location of these heritage buildings is so very special,” says D’Alessandri, director of Socius Wealth Management. “They have the best positions in Sydney, and it’s great to be in the hub of the city where everything happens.

“I feel being here means there’s no excuse for people not to want to come and see us. We’re close to all public transport, the trains, buses and ferries, and there are lots of good cafes and restaurants and prestigious brands like Armani and Paspaley in the corner.”

He’s an old hand at selecting some of the finest office spaces available, too. For 13 years, his company occupied offices in the 1895 building at 350 George Street just around the corner, which in 1984 was renovated for use as the headquarters of Societe-Generale Australia. The leadlight ceiling in the dramatic 30-metre atrium in the foyer was restored, and marble imported from an especially reopened Belgian quarry to match the original of its grand internal staircase. It’s recently been put up for sale.

As a result, D’Alessandri has just moved the firm to the 12-level Challis House at 4 Martin Place, a sandstone-clad 1907 building, with beautiful art deco details, a grand entrance finished in stone and timber with stained glass windows, and high-ceilinged offices lined with wood panelling.