Family offices, small businesses to fill up Melbourne office tower

Though it might sound “counter-intuitive” to be undertaking a speculative $180-$200 million office development given the state of the office market more broadly, Mr Price said the developer’s own hunt for office space had revealed a dearth of opportunities for those seeking floor plates of less than 400sq m.

“We plan to build an enormously well-regarded building at the Paris End of the city, that will have links to all the hospitality amenity on Flinders Lane and that could serve as the headquarters of private family offices,” he told The Australian Financial Review.

It was a different kind of proposal, Mr Price stressed, to the much bigger, more generic CBD office towers, where heated discussions about valuations and cap rates are dominating boardroom discussions at the institutional end of town.

“There’s only so many insurance companies, legal and accounting firms that can pre-commit [to those types of buildings]” he said.

But he said he could already see a large pool of likely tenants for Time & Place’s proposed development, which will retain the distinctive red brick facade of the 1900 building originally built for Griffiths Brothers Tea Merchants (and until recently a luxury Accor hotel), but build a modern tower above it.

Having agreed to pay Rich Lister Robert Magid $50 million for the building just over a year ago, Mr Price said Time & Place intended to kick off construction before the end of the year, without any pre-committed tenants.

“You don’t get many pre-commitments with 400sq m floor plates, and the number of pre-commitments in the metro market generally is reducing,” he said.

He said lenders had accepted the changed market conditions, and were willing to fund well-located speculative projects “with business cases that made sense” and by developers with good track records.

“We’re at a moment in time where there are lots of conversations about cap rates, values and the longer-term place of offices in our working world. But we believe this project stands aside from all that,” Mr Price said.

He added that the grandeur associated with the building, its colourful history and views of the Yarra, Botanic Gardens, arts and sporting precincts in the new tower would all be appealing to prospective tenants.

Alongside these aspects, Time & Place will target best practice environmental and sustainability benchmarks for the property including a 5-Star Green Rating and 5.5 Star NABERS rating.