This article is from the Australian Property Journal archive
RETAIL behemoth Amazon will anchor the first office tower to be built within Charter Hall’s new $1.5 billion development in the west of Melbourne’s CBD, giving the weakened office market a shot in the arm heading into the new year.
The deal at 555 Collins St allows Charter Hall’s Prime Office Fund (CPOF) to kick off construction of the project. It will comprise the 48,000 sqm premium grade tower as stage one, worth $750 million, and a stage two tower of 32,000 sqm.
The project secured planning approval earlier in the year from the Victorian state government under its building recovery taskforce. On-site works are under way at the first tower with Lendlease confirmed as the construction partner, having completed the Charter Hall’s 130 Lonsdale St tower of 60,000 sqm at the other end of the CBD earlier this year.
Up to 7,500 workers will be accommodated within the 555 Collins St buildings. Amazon is expected to take about 15,000 sqm within stage one as it moves from Exhibition St.
“This major pre-commitment provides the momentum for CPOF to proceed with construction and advance further leasing interest during the development phase, as we did on the Wesley project, which was 100% pre committed 12 months before practical completion,” Charter Hall’s managing director and group chief executive, David Harrison said.
“We expect a flight to high quality modern office buildings as tenant customers refine their workplace to meet the changing appetite for modern, technology and health/hygiene driven accommodation requirements,” he said.
Charter Hall was advised by James Palmer from JLL in relation to the lease.
The Melbourne office market has been left reeling by the pandemic. Having been home to the tightest CBD vacancy in the country, the vacancy rate blew out to 11.3% in the September quarter as it fell back into a second lockdown that left the city deserted.
Sublease space surged by 46% to a new seven year high, and further pressure is expected to arrive in the form of the largest influx of new supply in almost three decades.
Victorian Treasurer Tim Pallas said projects like 555 Collins St would drive economic activity in the inner city.
“This is exactly what Melbourne’s CBD – and our economy – needs right now: a project that will bring to life this end of town and create hundreds of construction jobs. Victoria was the strongest economy in the country before the pandemic and with investments like these in the pipeline, we’re confident we’ll come back even better and stronger.”
Melbourne Lord Mayor Sally Capp said the first stage of the project is a huge vote of confidence in the future of the city’s economy.
“Charter Hall’s development will create 1,500 construction jobs now and it also shows there is a strong belief in the strength of the city’s economic recovery.
“The city’s economy is beginning its recovery from COVID-19 but city businesses are still doing it tough. This is a project that we want to be a catalyst for further investment and new jobs in our city,” said the Lord Mayor.
Charter Hall now has $1.8 billion worth of committed office developments. The Wesley Place precinct also benefited from the Victorian government’s project approval spree during the year. The green light was also given for the $290 million future headquarters of the Australian Federal Police at 140 Lonsdale St, and for the overhaul of the existing building 150 Lonsdale St.
555 Collins St is owned by CPOF, which on completion of its current development pipeline will grow to an $8 billion office portfolio.
Charter Hall worked with Cox Architecture and global design practice Gensler on the new project. It said 555 Collins St would “leverage next generation health and hygiene technology and design” in response to the ongoing COVID-19 environment. Bathrooms will be a touch-free environment, leveraging sensor technology for access and use. Heating, ventilation and air-conditioning systems will monitor air quality and contamination, and ultraviolet sanitisers will be available on escalators and in bathrooms.
Additional technology integrations will include touchless amenity that allows for access the building, calling a lift to a specific floor, and to order and pay for their coffee on Charter Hall’s own app.
