Software group SAP is set to join Nine Entertainment as a tenant, moving its Australia and New Zealand headquarters to Winten Property Group’s $1 billion 1 Denison Street, North Sydney office tower.
SAP, which currently leases at nearby 168 Walker Street, has committed to lease about 6,000 square metres of space in the North Sydney building, which is scheduled to be completed in late 2019.
CBRE represented Winten in the lease negotiations. The 10-year agreement follows last year’s 17,000 square metre commitment to 1 Denison Street by anchor tenant Nine Entertainment Co, which runs the Nine media network.
SAP Australia and New Zealand will also continue to serve its ANZ customer base out of offices in Brisbane, Canberra, Melbourne and Perth in Australia, and in Auckland and Wellington in New Zealand.
On completion, the 39-storey, 1 Denison Street tower will be the tallest skyscraper in North Sydney. Multiplex has been appointed by Winten Property Group to deliver the 37-level commercial office tower, providing more than 60,000 square metres of office space with a two-level lifestyle precinct.
A further 33,000 square metres is available for lease following the SAP and Nine Entertainment Co pre-commitments. Net office rents for the balance of the building average $885 per square metre a year.
CBRE regional director John Hickey said 1 Denison’s prime location adjacent to the new Metro train station, in conjunction with North Sydney Council’s pedestrianisation of the precinct, “will result in a vibrant new hub for North Sydney. This will attract new tenants to the market and assist in the retention of major North Sydney occupiers such as SAP”.
Winton Property group development director Stuart Vaughan said SAP will be tenants in the mid-rise of 1 Denison, which takes the property to 40 per cent pre-committed. The building will also feature large public spaces.
The deal comes as LJ Hooker Commercial says Sydney’s office landlords will have the upper hand in tenant negotiations into the next decade as the availability of space throughout the CBD and suburban markets tightens.
Mathew Tiller, managing director at LJ Hooker Commercial, said yields would continue to firm over the short to medium term.
“Developers have been focusing on the suburban markets of Parramatta, South Sydney, North Sydney, Olympic Park and CBA’s campus at Eveleigh, but the market is expected to easily absorb these additions,” Mr Tiller said.
“There’s still 12 to 18 months to run as the under-supply and withdrawal of stock gives rise to rental growth.”
Mr Tiller said the non-CBD vacancy rate will remain at around 5 per cent for a sustained period, with all the major markets expected to experience either lower vacancies than now or to remain tight.
He did not expect enough new supply would be available to rebalance the market over the next three years.
SAP ANZ president and managing director Colin Brookes said the relocation was motivated by securing the best outcome for SAP’s customers and partners, and most importantly ensuring a great place to work for its people.