Cbus and Scentre embark on $300m city project
Cbus Property and retail landlord Scentre are only months away from commencing the transformation of the former David Jones menswear store in Sydney into a $300 million, luxury retail, office and residential landmark.
The two will get the keys for the 77 Market Street site in May, after which, under the scheme, Cbus will develop six floors of prime interconnected office space and 101 high-end apartments covering 22 floors.
It will kick off the redevelopment of the eastern end of the city where City Tatts is undertaking a new hotel on its existing club in Pitt Street and the new nearby Metro rail project. Charter Hall will also look at revamping its office tower at 201 Elizabeth Street.
Scentre will develop the former department store into luxury retail that will also be connected and complement its Westfield Sydney mall over the road. David Jones is moving its menswear and famed food hall into the adjacent flagship store in Elizabeth Street.
Known as 121 Castlereagh Street, the commercial component will cover floors seven to 12 with premium-grade serviced office space of about 11,500 square metres, transforming the existing heritage building.
It will be connected to the residential tower at 111 Castlereagh Street, which will be a collection of boutique apartments and penthouses with views across Hyde Park and beyond to Sydney Harbour. The tower has been designed by architects fjmt.
Cbus Property chief executive Adrian Pozzo said the commercial space will be visibly connected to the “highly anticipated extension of Westfield Sydney below”, which is being developed by Scentre Group.
Having developed the heritage site at 5 Martin Place, Cbus says it has the expertise and patience to tackle any similar issues in Castlereagh Street.
“This development ticks all the boxes at a time when office vacancy is very tight,” Mr Pozzo said.
“This is a unique space and we don’t expect one tenant, but a number of tenants. The floor plates are large and we feel it will suit a range of occupiers.”
Cameron Williams, national director of office leasing at Colliers International, is co-ordinating the leasing and says demand is very high for office space in Sydney despite a range of new buildings being constructed. Colliers International is also selling the apartments.
“This is a genuinely different office space due to its connectivity to the retail below and the residential above and comes at a time when the Sydney office market is at record low vacancies,” Mr Williams said.
“While there is new supply coming on, most has been pre-leased and there has not been much to offer in this part of the CBD.”
Mr Pozzo said that with the flow of money into superannuation funds, Cbus was “on the lookout” for more developments at a time when supply “is pretty thin”.
“We have between 11 and 12 per cent of funds allocated to direct and indirect property and we are looking out for the next cycle of opportunity,” he said.
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