Government tenants provide a safe haven beyond COVID-19
The founder of Sydney-based Ashbridge Capital says government tenants are increasingly highly sought after by commercial property investors amid the severe economic fallout from the coronavirus pandemic.
Vishant Narayan, whose firm is overseeing a $40 million upgrade of the Riverside Centre on North Terrace in the Adelaide CBD comprising refurbishments and tenant retention programs, said federal and state government tenants were proving an important safe haven in the market.
“It’s as safe as you can get,” Mr Narayan said.
The office tower is owned by Germany’s Atlantic Funds.
Mr Narayan also believes that while there is a big short-term shift in the number of people working from home because of the coronavirus pandemic, it won’t trigger a permanent shift where office buildings might battle to attract tenants over the next decade.
“People will still want to congregate and be part of something,” he said.
Companies and government agencies had been forced to rapidly adopt different ways of working because of health restrictions, with new technology making it relatively seamless.
“What this has done is just accelerated the general trend,” Mr Narayan said.
But once the health crisis has passed, there would be a shift back because the positives from teams working closely together with a physical presence in the office outweighed cost savings. “Office buildings aren’t going to be empty,” he said.
He said the fallout for the private sector was much deeper during the coronavirus pandemic and the safety of long-term government leases was proving its worth.
Ashbridge and Atlantic Funds are overseeing the upgrade for the office tower, which, after negotiations for 10-year lease renewals on 21,000sq m of prime office space, is now fully tenanted with leases running until the end of calendar 2030.
Anchor tenants include the Department of Human Services.
The Riverside Centre faces North Terrace and is located between the Adelaide Convention Centre and the city’s historic railway station, which has just been upgraded further through a $6 million revamp of a 1928 cafe into The Guardsman restaurant.
Sky City is in the final stages of completing a $330 million hotel called Eos at the rear of its Adelaide casino complex, which is part of the heritage railway station building.
Mr Narayan, previously a managing director of Real I.S. Group, has invested and managed $400 million of investment into Adelaide commercial real estate from European investors.
The Riverbank Centre was first opened in 1989.
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