This article is from the Australian Property Journal archive
AS uncertainties remain about the future of the office and the sector sees a reckoning on valuations, Charter Hall is backing the flight-to-quality trend and has forged ahead with its plans for the 50,000 sqm Chifley South tower in Sydney.
The property giant has now lodged a development application with the City of Sydney for a companion to the existing Chifley North tower. It had received official endorsement from the City of Sydney in August for a $2 billion, 37-storey tower with 64,000 sqm of office and retail space.
Chifley South has over 16,000 sqm of space pre-committed, with international investment bank UBS and Charter Hall secured as future occupants.
“We are confident that Chifley South will deliver on its leasing potential, with limited competition from new buildings planned in the Sydney CBD between 2024 and 2027,” said Charter Hall office CEO, Carmel Hourigan.
“We continue to see a growing appetite for new, premium office buildings in line with the strong bifurcation of the office market, and Chifley South will be well-positioned to absorb that demand.”
Upon completion, the Chifley precinct will provide over 110,000 sqm of offices and have an end value of $4 billion. Enabling works have already commenced, with construction of the main tower expected to start in early 2024.
The office market shuddered this week with Dexus’ confirmation that its 44 Market Street tower in the Sydney CBD had sold at a 17.2% discount to book value. Many having expected the trend seen overseas to land down under imminently.
Australia’s office AREITs face eroding cash flows, rising capitalisation rates and higher asset valuation risks amid tough near-term conditions, as changing work habits challenge the structural demand outlook, according to S&P Global Ratings.
Dexus is also reportedly selling 1 Margaret Street at a 21% discount to the book value.
The Bates Smart-designed Chifley South tower will feature retail, third spaces and wellness facilities, a centrally-located “urban room” that connects the grand entry lobby, business lounge, wellness, and retail spaces, mixed-mode workspaces with access to fresh air, dedicated tenant hub, business lounge and wellness offerings, and expansive access to natural light and views to the Royal Botanic Gardens, the Domain and Sydney Harbour.
Sustainability features include targeting a 6-Star Green Star Buildings v1 rating, which will support Chifley in realising Climate Active Carbon Neutral certification in line with the City of Sydney’s Net Zero Strategy.
“This development is set to reenergise the iconic Chifley precinct and contribute to the vibrancy of the Sydney CBD,” said Charter Hall managing director and group CEO, David Harrison.
The Bates Smart design team said, “2 Chifley Square is a distinguished address that makes a positive contribution to the city skyline. Our design creates an urban ensemble with Chifley North tower that simultaneously complements and respects it, while being clearly of the 21st century in terms of people amenity, workplace, and environmental performance.”
Charter Hall will also undertake an electrification and upgrade of the existing Chifley North tower through the removal of the existing gas-fired plant equipment, and both towers to operate entirely on renewable energy.
An estimated 1,500 jobs will be created in the construction phase.
