This article is from the Australian Property Journal archive
TELCOMMUNICATION giant Telstra has made a call not to renew around 57,000 sqm of office space in Melbourne, in a move to cut costs which no doubt will please shareholders.
According to industry sources, Telstra has decided not renew its lease in seven office accommodations across Melbourne.
Telstra’s decision is part of a new strategy announced by David Thodey to simplify the company’s business, cut costs and axe 950 jobs.
The leases which total 57,430 sqm, is estimated to save the Telco around $24.5 million in rentals per annum, according to sources.
“Telstra has been smart with leasing space in Melbourne market, it was very busy last year and earlier this year, locking in long term leases for 100,000 sqm of space when landlords were offering huge incentives,” the source said.
Last year Telstra extended its leases with Investa Property Group at 242 Exhibition Street for 63,372 sqm and earlier this year 9,000 sqm at 717 Bourke Street and signed a 12-year lease for 23,482 sqm at Charter Hall Office REIT’s building at 300 La Trobe Street.
“They are selectively not renewing space at certain buildings where the lease is expiring. Telstra has not broken any leases.
“And they are not in the market for new space and haven’t put out a tender for an office building of 55,000 sqm,” the source said.
The biggest casualty will be the 55,000 sqm Rialto tower at 525 Collins Street, jointly owned by the Grollo family and St Martin, where Telstra currently leases 16,000 sqm of space.
Telstra’s lease at Rialto had expired in April this year and it had refused to confirm or deny whether it was going to recommit to the building.
Meanwhile Telstra’s lease at GPT’s Melbourne Central Tower at 560 Elizabeth Street is set to expire in October next year, totalling 11,930 sqm of space.
The Telco will also give up 7,000 sqm at GE Real Estate’s 90 Collins Street in the “Paris end” of the city and its 6,000 sqm lease at Investa Property Group’s 469 La Trobe Street, which is up for sale, is due to expire in early 2011. Valad was in the running to buy the property for $80 million but changed its mind.
Nearby at 485 La Trobe Street, Telstra has not renewed 7,260 sqm. The property was sold by Investa to Hong Kong’s CLSA Capital Partners for $140.1 million in August this year.
Outside of the CBD, the Telco currently leases 3,500 sqm at Mirvac’s Riverside Quay in Southbank and 6,000 sqm at the Banco Property Group and Smorgon family owned Greenwood Office Park in Burwood, located 11km from the Melbourne CBD.
Australian Property Journal
