This article is from the Australian Property Journal archive
SOUTH Australia’s Malinauskas government is seeking a development partner to deliver more than 17,000 sqm of Adelaide CBD office space, which will include the headquarters of defence giant BAE Systems and space, cyber and critical technologies firms.
The Innovation Centre, to be built on the former Royal Adelaide Hospital site at Lot Fourteen, is expected to take shape by 2027 and will house over $100 million in state and federal government projects. These include a $60 million Australian Defence Technologies Academy, funded by the state and federal government as part of the Adelaide City Deal, the $20 million Innovation Hub, funded by the federal government as part of the Adelaide City Deal, and the $20 million Space Assembly Integration and Testing Facility.
BAE Systems’ new office, announced this week, will house around 500 employees. The company is building Hunter-class frigates and submarines under the $368 billion nuclear-powered AUKUS agreement.
An expressions of interest campaign for a development partner is now open through JLL’s Ben Parkinson and Jack O’Leary, acting on behalf of Renewal SA for the South Australian government.
The Innovation Centre has a targeted practical completion date of Q4 2027 and will have 77% of the project pre-committed on 10-year lease terms.
The successful tenderer would secure a 100% leasehold interest via a 99-year ground lease as well as the opportunity for exclusive rights for the pipeline of future district development slated for Lot Fourteen over the next decade.
“The Innovation Centre represents a rare opportunity to deliver a project that will advance the continued transformation of Adelaide’s economy, technology and capability,” Parkinson said.
“It’s central to the evolution of Lot Fourteen as a district of national and global significance, particularly in relation to the state’s defence landscape.”
The project will be further supported by the upcoming merger of the University of South Australia and University of Adelaide into Adelaide University, which will launch in 2026 and shape an expanded focus on STEM and on areas such as defence, cyber and engineering.
O’Leary said the development would answer sharpening demand for good-quality high-end office stock across the Adelaide CBD.
JLL Research figures identify that on the back of a recently-concluded high supply wave, there is a very limited future supply pipeline for CBD office space. As of the June quarter, the vacancy rate for premium-grade office space was just 8.1%, compared to a vacancy rate of 16.5% across the overall Adelaide CBD office market.
Of current vacant space, more than 75% is concentrated in just 13% of buildings.
“With minimal new projects scheduled for completion during the next few years, the injection of at least 17,000 sqm of net lettable area through the Innovation Centre, secured by government tenancies and future development rights in the district, shapes a powerful proposition for domestic and foreign investors,” O’Leary said.
Lot Fourteen, established with a combined investment of $756 million by the state and federal governments, is already home to players in a range of booming industries from cyber to AI, and research and industry powerhouses, including the Australian Space Agency, the Australian Cyber Collaboration Centre and the University of Adelaide’s Australian Institute for Machine Learning.
