This article is from the Australian Property Journal archive
SYDNEY’S office sector has been given a boost, with KPMG’s renewal over 33,000 sqm in Barangaroo headlining a suite of leasing deals in the uncertain market.
The major consulting firm will remain at its 14 floors at International Tower Three within Lendlease’s Barangaroo South precinct until 2034.
The renewal caps off an active 18 months at the Barangaroo South precinct, with about 90% of tenants making future office commitments choosing to recommit to the precinct, for a total of 123,000 sqm of renewals and new leases completed.
Among the most recent deals were for Accenture at International House, and PwC renewing its lease over 10 floors at International Tower One.
Demand from new tenants has resulted in subleasing opportunities in the precinct being substantially absorbed with limited availability remaining, Lendlease said. Telecommunications company TPG Telecom recently made a long-term commitment to the precinct, consolidating its Glebe and North Sydney operations into four floors in Tower Two.
Several tenants have also taken the opportunity to expand their footprint at Barangaroo as they have renewed leases. Quantitative trading firm SIG Susquehanna doubled its footprint to two floors in Tower One.
Overall, the precinct is about 93% occupied.
The opening of the Barangaroo Metro station this year will add to the precinct’s transport connectivity, which currently includes Wynyard Station, bus and ferry routes.
Sydney’s office vacancy rate was pushed up from 11.5% to 12.2% over the six months to January, according to the Property Council of Australia. However, according to Knight Frank, the CBD market ended 2023 with record enquiry levels and an increase of 15% year-on-year. The smaller occupier of sub-1,000 sqm made up 75% of enquiry, while there was also an increase at the larger end with several 5,000 sqm-plus transactions documented.
The office market has been grappling with the working-from-home trend, which has seen businesses cut back on space or delay committing to deals, as well as new stock coming online, while the secondary market has seen higher vacancies amid a flight to quality.
Lendlease, meanwhile has scored another win – in North Sydney, with essential infrastructure services provider Ventia moving a blocks over from out of Mirvac’s 80 Pacific Highway and into the new Victoria Cross integrated station precinct.
Ventia will occupy approximately 3,500 sqm across levels 26 and 27 of the Victoria Cross Tower, the precinct’s flagship commercial building that is currently under construction.
Located directly above the new Sydney Metro station, and targeting completion in 2025, Victoria Cross Tower will be a 42-storey commercial building that will accommodate up to 7,000 workers across 58,000 sqm of premium-grade office space.
Designed by Bates Smart, the majority of floors will boast iconic Sydney Harbour, Sydney Harbour Bridge and CBD views.
The precinct will feature new public space and 20 new retail and hospitality brands,14 of which are opening later this year in the concourse and new pedestrian laneway. A new laneway will provide a new hospitality and recreation hotspot, anchored by multi-level food and beverage destination Miller House.
The opening of Sydney Metro Victoria Cross station this year with cut transit times to Barangaroo to three minutes, Martin Place to five minutes and Central Station to nine minutes.
Victoria Cross Tower will be net zero carbon and all-electric, powered by 100% renewables and is targeting a Platinum WELL and 6-Star Green Star rating.
Victoria Cross Tower is 25% owned by Lendlease’s office fund, APPF Commercial.
“Across our commercial portfolio, our tenant partners continue to seek workplace experiences that attract and retain the best talent and support productivity. Which is why we’re seeing a growing demand for premium-grade workplaces in prime locations that prioritise sustainability, flexibility and amenity,” said Tom Mackellar, managing director development, Lendlease.
