This article is from the Australian Property Journal archive
US real estate firm Hines has shrugged off concerns about the office market, picking up a Melbourne city site with plans for a $1 billion tower despite the impact of the pandemic and heavy volumes of new supply.
The site at 600 Collins St was previously set for a Mandarin Oriental Hotel designed by renowned architect, the late Zaha Hadid. Hines will amend the existing mixed use permit to deliver a tower with 60,000 sqm of office space in the city’s western precinct.
The site was acquired from Melbourne-based property development firm, Landream. Paul Kempton of Knight Frank acting for Hines.
Three of Hines’ five projects in development across the Asia Pacific region are in Melbourne. As well as its new acquisition, the group is planning a 15 storey timber creative office building in the inner suburb of Collingwood, and a 10 storey boutique office project, 9 Stewart St, in Richmond.
Hines’ acquisition quickly follows retail behemoth Amazon’s commitment to anchor the first office tower within Charter Hall’s new $1.5 billion development nearby at 555 Collins St.
Hines managing director David Warneford commented that the acquisition reflects the firm’s global confidence in the long-term future of the office sector post-COVID.
“We have witnessed an unprecedented experiment in work-from-home as a result of the pandemic, which has sparked change in the way people will work in the future,” he said.
“Businesses will demand office space that responds to their unique needs such as: flexible ways of working; a strong focus on health and wellness; an atmosphere conducive to collaboration and continuity of corporate culture and seamless technology integration.
“600 Collins St will deliver those key elements to a level not yet seen in Melbourne.”
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. A new Property Council of Australia’s survey shows just 13% of city office floor space is currently occupied. The Victorian government will allow up to 50% capacity during January.
Sublease space surged by 46% to a new seven year high. Further pressure is expected to arrive in the form of the largest influx of new supply in almost three decades.
“600 Collins St will be a core, best-in-class Hines product, utilizing forward-thinking design principles and globally informed construction methodologies to ensure the highest standard of quality and a top position amongst its competitive set,” Hines director, Simon Nasa said.
