Developer Digital Harbour is pressing ahead with a $500 million commercial office in Melbourne’s Docklands, submitting plans for twin towers with 40,000 square metres.
The developer is looking beyond the coronavirus uncertainty roiling the property sector as it progresses discussions with several major tenants to anchor the Bates Smart designed project.
The proposed tower is next to Melbourne Water’s new headquarters at 990 La Trobe Street, opposite the Marvel Stadium.
Since December 2000, Digital Harbour has held development rights over a large waterfront block beside Marvel Stadium on Harbour Esplanade, bordered by the rail line and Dudley and La Trobe streets.
The group is controlled by five family funds: the Liberman’s JGL Investments run by Paul Abrahams, Russell Nisbet’s family company Serene Gold, David Napier’s Forty First Natro, Michael Kohn’s family company Mat-Tastic and the family company of Qualitas founder Andrew Schwartz.
The developer, run by David Napier, has submitted plans for a site now being used as a car park at 30-40 Digital Drive.
The plans include two towers with a combined gross leasing area of 39,744 sq m, 494 sq m of retail space, a health and wellness centre and 302 car parking spaces.
Mr Napier said the company was in confidential negotiations with several tenants to anchor and occupy the building.
“If we can get a major tenant of significant size our intention is to go ahead,” he said. “This is a three to four year timeline. Everyone is now starting to talk about the other side of the virus and where we are going.”
Digital Harbour has already developed several buildings on the site.
It was behind the Melbourne Water headquarters at 990 La Trobe Street which is now owned by a Charter Hall fund.
On the prominent corner of Harbour Esplanade 1010 La Trobe Street it has retained ownership of an office occupied by Australia’s Border Force and rail corporation VicTrack.
Another portion of its site at 1000 La Trobe Street was sold to China-backed Poly Australia for $32 million.
Poly is understood to have signed Myer to occupy 10,000 sq m in the new 31,000 sq m, 24-storey A-grade office tower that is now under construction at the site.
Mr Napier said each tower had 1500 sq m floorplates but each level could be joined with its counterpart to make 3000 sq m office floors.
The group expects to have a permit in the next three to four months. “We won’t start the building without a pre-commitment,” he said.
While Australia moves slowly towards lifting the lockdown on its population, a recent note on the property sector from S&P Global Ratings credit analyst Craig Parker warns the coronavirus pandemic may hasten a structural shift toward e-commerce and remote working, undermining retail and office REITs.
“Cost cutting, staff reductions, and changing work patterns are the biggest risks to office landlords. This shift will become more widespread with a prolonged disruption, cutting demand for office space and overall market occupancy over the medium to longer term,” Mr Parker said.
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