NBN Co seeks 20,000sqm for new Melbourne office
NBN Co is looking to bring its offices together in Melbourne. Photo: Glenn Hunt

NBN Co seeks 20,000sqm for new Melbourne office

Broadband giant NBN Co has become a major tenant in its own right, putting out a requirement for 20,000 square metres of space in the Melbourne market.

Normally such a request could be enough to anchor the development of an entirely new office tower.

The telco, which is consolidating its service rollout and expecting to sign up about 1 million new users this financial year, has indicated it will consider both existing and new buildings.

Given that NBN Co wants the A-grade space at or before 2019, there may not be enough time to meet the request in any new development which is not already underway.

As well, the telco is seeking tenure of five years, plus options, which may not be substantial enough in the first instance for a new development. It will also consider sub-leasing.

Even so, the hefty demand is set to soak up a considerable portion of Melbourne’s market, which is already tipping back in favour of landlords as vacancy contracts and face rents rise.

Melbourne posted the second highest commercial office rental growth in the world for the September quarter, with Sydney just behind.

The proposed tenancy would integrate at least some of the NBN’s dispersed locations around the Melbourne CBD.

The telco has more than 11,000 square metres of space in GPT’s Melbourne Central, on leases expiring in early 2020. It has also sub-leased 6800 square metres from Fairfax in Media House at 655 Collins Street, which GPT also owns. The Fairfax lease expires in 2029.

The national broadband provider also took about 4000 square metres of space at 120 Spencer Street as well, which was bought by Anton Capital earlier this year.

NBN is being assisted by Pepper Property Advisory. It has a number of options, including in new buildings underway or due to begin construction, such as the fifth tower at Lang Walker’s Collin Square.

There is also space coming up in existing buildings such as the GPT-controlled 550 Bourke Street, when Deloitte moves to Mirvac’s new development on Collins Street and also at 750 Collins Street.

A number of other major tenants are adding demand to the market, including Monash University with 40,000 square metres and advertising firm Denstu for 20,000 square metres.

Energy Australia is in the market for 20,000 sq m, making it a potential candidate for 2 Riverside Quay after PwC moves out next year.

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