Safe as houses: Melbourne's growing love for new office buildings
The sight of cranes in and around Melbourne has been a familiar one for years. But a hallmark of the past 24 months has been the change in what they are building.
For more than a decade, builders have predominantly been developing apartment towers, a consequence of substantial population growth (currently running at about 100,000 new residents per annum).
In recent times, however, they have turned to developing commercial property – namely offices, and, to a lesser degree, factories, retail and tourist accommodation.
In 2016, a local developer surprised many residential agents by applying to replace a Fitzroy site prime for an apartment complex with two new offices, including what will be that suburb’s tallest commercial tower, rising 16 levels.
More offices have also been developed at Chadstone Shopping Centre this year, including repurposing the former headquarters of billionaire businessman and co-shopping centre owner John Gandel into a coworking hub. The space is directly above a David Jones store and could have made way for a straightforward retail extension.
The proposed $30 million office complex at the former Rosella factory in Cremorne.
Two years ago, when developer Caydon proposed replacing the ex-Beaver Plastics site on the prominent corner of the south-east freeway and Harcourt Parade, in Cremorne, it was considered by some agents to be counter cyclical.
Fast forward to today and office stock in Cremorne is short: two recent deals, both to MYOB to accommodate staff who didn’t want to work at that company’s suburban headquarters, substantially reduced vacancy levels in the area, now said to command amongst the highest rents outside of the city.
At present, it is easy to argue that developers are considering offices ”safe as houses”.
Here are some of the major office developments under construction, or mooted, for the city and surrounds.
CBD: Wesley Place, 130, 140 and 150 Lonsdale streets
Somewhat reminiscent of the enormous QV Melbourne redevelopment nearby, which saw two office towers, with a total of about 60,000 square metres of lettable area developed in 2004, Wesley Place is set to deliver commercial stock, staggered over coming years.
The first and the biggest of these buildings, a 35-storey, 60,000-square-metre premium-grade tower, is set for 130 Lonsdale Street, immediately east of, and with view security over, the circa-1858 bluestone Wesley Uniting Church.
Since marketing began last year, three large companies have pre-committed, including investment house Vanguard, which is taking 10,500 square metres; Cbus Super (9200 square metres) and Telstra Super (3350 square metres).
Colliers International’s Tony Landrigan, one of the marketing agents, said he was fielding strong demand for the balance (about 23,000 square metres) of space in this building, which is expected to open in the second quarter of 2020.
On the western side of the church, a second office building, rising 22 levels, and offering 16,500 square metres of A-grade space, was approved for construction last year for an address to be known as 140 Lonsdale Street.
It is expected this office will open in the first three months of 2021.
The site’s manager and developer, Charter Hall, will also build new office accommodation for the Uniting Church – which, until 2016, controlled the 7445-square-metre site on which Wesley Place is being developed.
First-stage go-ahead: Impact Investment Group’s Younghusband Woolstore precinct in inner-city Melbourne. Photo: Impact Investment Group
Wesley Place is being leased by James Palmer and Stuart Colquhoun of Jones Lang LaSalle, and Mr Landrigan and Edward Knowles of Colliers.
Mr Landrigan said Wesley Place would also include a “very exciting” retail precinct.
It also includes an existing office tower at 150 Lonsdale Street: 29 storeys with 28,755 square metres of refurbished lettable area, which will also be undergoing major repositioning works.
Between the new offices, the Wesley Court forecourt will be redesigned with a public courtyard, shaded by trees, expected to be used as a community hub and events platform for the church, civic, arts and community. Heritage buildings on the site will also be restored and adapted for these uses.
Cremorne: ex-Rosella factory
No sooner had aged care operator turned developer Zig Inge Group unveiled plans to replace the airspace of an historic ex-Rosella sauce factory at 57-61 Balmain Street, Cremorne, with a seven-storey, 7500-square-metre office, did it seem to find a tenant, Reece, to lease part of it.
As such, one of inner-Melbourne’s newest offices will abut the train line between the busy Richmond and South Yarra stations, and open in 2020.
Younghusband Kensington
A development house co-owned by the wealthy Liberman family is seeking to establish an office precinct in Melbourne’s north-west by repurposing two historic and high-profile warehouses in Kensington to a commercial hub, the first tranche of which will add about 17,000 square metres of lettable area.
The Elizabeth Street project will include the restoration of bluestone lanes, a bridge connecting the two buildings – and involve knocking down floors and walls to create a dramatic and light-filled atrium. The rooftop of the ex-Younghusband factories will also be fitted out as a restaurant-bar with fruit trees and a 1 megawatt solar farm.
Space in the redevelopment is being marketed by Savills’ Mathew Kent, Mark Rasmussen and Charlie Betts, with Cushman & Wakefield’s Ben McKendry and Vincent Tran.
The same developer, Impact Investment Group, has also recently renovated the ex-Lonely Planet headquarters, a 7000-square-metre ex-factory in Footscray, one suburb west of Kensington, into a coworking hub.
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