Charter Hall forges ahead at Chifley South as premium offices hold up

Charter Hall has won approval for the new Chifley tower development in Sydney.

Property funds group Charter Hall is advancing plans for its Chifley South complex in Sydney’s CBD as it backs its belief that top quality offices will come through the downturn in values.

Office towers in major cities are under pressure from the shift to hybrid working and discounted sales that have even hit A-grade buildings.

Prime towers like Chifley South are yet to trade, and developers argue they will be least affected by falling values.

Charter Hall is working with Singaporean sovereign fund GIC on the second tower at 2 Chifley Square, which will be anchored by investment bank UBS. It has now lodged a planning application with the City of Sydney, and it features a building designed by Bates Smart.

Chifley South will comprise a 37-storey premium-grade tower with a net lettable area of more than 50,000sq m, an enhanced podium and a reactivated public domain.

The new tower is billed as reaffirming the pre-eminent status of the Chifley office precinct and will become a standout on the Sydney skyline.

Charter Hall is alive to the changes in work practices and says there will be a tenant-centric workplace to provide the highest levels of flexibility and efficiency. The building will have mixed-mode workspaces with access to fresh air, a dedicated tenant hub, a business lounge and wellness areas.

It will have sustainability features and is targeting a 6-Star Green Star Buildings v1 rating, which will support the building in realising Climate Active Carbon Neutral certification.

“This development is set to re-­energise the iconic Chifley precinct and contribute to the vibrancy of the Sydney CBD,” Charter Hall chief executive David Harrison said.

“We look forward to partnering with Bates Smart and the City of ­Sydney to deliver a world-class building that provides a next-generation workplace and supports Sydney’s role as Australia’s leading global city.

Bates Smart has designed the tower to create an integrated ground-plane with a new double-height arcade between Bent and Hunter streets which opens the podium to the city.

Pre-leasing is well under way and Chifley South already has more than 16,000sq m pre-committed, with the developer also moving in.

Charter Hall office chief executive, Carmel Hourigan is bullish about the leasing potential, with limited competition from new buildings in the Sydney CBD between 2024 and 2027. This is partly as developers face difficulties in winning precommitments and finance.

“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,” she said.

Charter Hall will boost the sustainability of the entire Chifley precinct and will electrify and upgrade the existing Chifley North tower, so both towers operate on renewable energy.

Enabling works have kicked off, with building on the main tower expected to start in early 2024. The overall precinct’s end value is estimated at $4bn.