Sydney’s 55-storey timber Halo tower back on track

When built, it will lay claim to being the world’s tallest such hybrid timber tower.

However, the tower project, which has an estimated end value of $1.8 billion, had been struggling to come out of the ground as Milligan Group juggled a heavy debt burden after buying over 70 individual titles on the corner of Hunter and Pitt Streets.

That effort created a super-site across a new metro station, giving the developer scope for such a landmark skyscraper. But with its finances stretched and office market valuations falling, Milligan also needed to win support from a capital partner before going ahead with the ambitious development.

“This acquisition is a strong reflection of our strategy to secure well-located commercial assets that respond to future customer demand,” Cbus Property’s chief executive Adrian Pozzo, said in a statement on Wednesday.

“It supports our portfolio reweighting to Sydney and continues our track record of delivering high-quality developments that capture market uplift through timing and delivery excellence.”

The involvement of Cbus Property, the real estate arm of the $105 billion Cbus Super, comes just as the tide is turning for the national office market.

Sydney’s CBD has been the first to recover, especially at the top end of the market, where rising business confidence and a return-to-office vibe have encouraged blue-chip corporates to seek new spaces with high levels of amenity.

At the same time, high costs have made new projects unfeasible for most developers in the past few years, with the result that new office supply in Sydney’s CBD is forecast to fall well short of its historical average over the next three years.

Those factors combined are expected to put a premium on the few new office projects that do come out of the ground.

“Halo is widely recognised as an ambitious project that has the potential to redefine sustainability, design and workplace experience in Australia,” Milligan Group’s managing director, James Milligan, said.

“Cbus Property’s involvement will ensure the project benefits from the company’s proven track record in delivering complex, large-scale developments in partnership with leading industry participants.”

ASX-listed developer Lendlease had previously signed a non-binding agreement to acquire the project for $685 million by the end of last year, but the mooted deal did not proceed.

A turning point came for the project earlier this year, when its main lender, Merricks Capital – which was owed more than $500 million – made a bold decision to boost its loan by another $30 million, despite its exposure on Halo having contributed to its first monthly negative return in almost five years.

That top-up proved critical, providing further funding for demolition and early works at the site, boosting confidence it would go ahead, and giving Milligan some much-needed breathing room as it looked to bring on board a capital partner.

Cbus Property and Milligan are now working with Multiplex to finalise a construction contract, with main works expected to get underway late next year and completion early in 2030.