This article is from the Australian Property Journal archive
MELBOURNE’S CBD office market has received a shot in the arm, with global tech firm Ericsson committing to Charter Hall’s $1.5 billion 555 Collins Street development.
Ericsson has signed a 10-year pre-commitment lease for 3,350 sqm of space across nearly three floors, and will join Amazon, Aware Super, Allianz Australia, and Connective at the tower, which reached practical completion in June and is set to welcome tenants from October.
Now over 70% pre-committed, only the top five sky-rise floors of the building remain available.
The deal is some good news for the CBD market, which has been feeling the force of structural winds such as working-from-home. Office vacancies increased in the Melbourne CBD during the June quarter to 16.2%, according to JLL. Net absorption of just 6,800 sqm was recorded in Melbourne during the period, with leasing activity stronger in prime-grade assets which recorded 42,700 sqm over FY23 amid the ongoing flight-to-quality, while secondary-grade assets saw a contraction of 34,200 sqm.
However, the CBD midtown’s gain means more pain for the Docklands precinct on the CBD’s western edge, which has seen major tenants such as NAB up and leave for new digs in the city’s core in recent times. Ericsson will be vacating Centuria Office REIT’s A-grade, 2007-built 818 Bourke Street.
“Our decision to relocate our people to 555 Collins Street reflects our commitment to our environmental, social and corporate governance objectives as well as providing our people and future talent with a workplace that will inspire innovation, collaboration and productivity,” said Emilio Romeo, head of Ericsson Australia and New Zealand.
“This move will unlock an enhanced workplace experience for our people thanks to the ample amenities within the building and in the surrounding area, as well as our ability to make further progress on our sustainability goals.”
The tech-enabled development will offer touchless access and skyline terraces and is targeting a Platinum WELL Rating (Shell and Core), 6 star Green Star As-Built and Design rating, 6 star NABERS Waste rating, 5 star NABERS Energy rating, 4 star NABERS Water rating, and 5 star NABERS Indoor Environment rating.
555 Collins will also be home to Charter Hall’s first coworking space managed by Hub Australia, known as 555 Collins Exchange, allowing tenants to book additional spaces, boardrooms, meeting rooms, and project space as needed.
The dual-tower 555 Collins Street precinct attracted the investment of Singapore’s sovereign wealth fund GIC last year.
Charter Hall Office CEO, Carmel Hourigan, said, “We are pleased to be partnering with Ericsson to deliver a workplace that meets the needs of its people and its business. 555 Collins Street embodies a tenant-centric approach in its design and responds to the evolving way that Australians work and live, and our newly established partnership with Hub is a reflection of how we partner with best-in-class experts to deliver exceptional experiences for our tenant customers.
“Our conviction on the demand for high-quality office stock with best-in-class amenity, location and sustainability features remains strong and continues to be reinforced by the strong interest in our developments across the country,” she said.
Charter Hall was represented by JLL and Colliers, while Ericsson was represented by Cushman & Wakefield.
