Mirvac lodges plans for new Circular Quay tower
Property developer Mirvac has lodged fresh plans for a major tower at Sydney’s Circular Quay, kicking off a new race to build city offices for an expected longer-term recovery in the property sector.
Developers are urging governments to fast-track major projects that can provide construction jobs and to ensure that policy settings are in place for a recovery in white collar employment, despite some analysts warning that city office markets are in for a tough run.
Macquarie Equities last week warned that net effective rents may fall by up to a quarter on the back of forecasts that global GDP growth could fall by 8%, driving a domestic unemployment shock that would be greater than in the global financial crisis.
But the bank said the coming office cycle could be partially supported by massive monetary and fiscal policy stimulus and the block where Mirvac is proposing to build already sports a project by Lendlease that will become Sydey’s tallest office skyscraper. It will be anchored by US company Salesforce and open in 2022, and be the largest building in the $5bn precinct.
AMP Capital is also developing the nearby $3bn Quay Quarter Tower that will serve as the financial services company’s global headquarters and also accommodate Deloitte in 2022.
Mirvac already has a presence on the block as it developed the tower at 200 George Street occupied by Ernst & Young. It has long planned another tower and has now worked up plans for a 232m edifice on Pitt Street after striking deals with neighbouring landowners.
This has boosted the size of its project at 55 Pitt Street and it will compete for tenants in future against Dexus, that is planning a super-tall skyscraper at its nearby proposed Pitt and Bridge precinct.
The move comes after Mirvac lodged plans for another major tower in Melbourne’s central business district last week and indicates it is looking past the coronavirus and hopeful that it will kick off new projects once the economy recovers.
In Melbourne, Mirvac lodged an application for its site at 383 La Trobe Street where it is planning to create a commercial precinct with 44,000sq m of A-grade office space over 31 levels.
The company is already vying against industry superannuation fund-backed Cbus Property to develop the $2bn Treasury Square precinct on the fringe of Melbourne’s central business district.
The projects would require leasing precommitments to get started so might take some period to launch, but the planning shows that developers are readying for the period after the virus has passed.
Mirvac head of office and industrial Campbell Hanan says the vision for the Sydney site is to “bring to life an exemplary workplace and activated city precinct that significantly enhances the existing urban streetscape”.
“In the heart of the CBD, the proposed plans will deliver approximately 60,000sq ms of premium commercial and retail space, and contribute towards the revitalisation of the iconic Circular Quay precinct,” he says.
Subject to the winning approval from the City of Sydney, Mirvac will launch an international design competition for the landmark site.
The Mirvac-built EY Centre next door was completed in 2016 and has won more than 20 awards for its design, sustainability, construction and innovation.
Despite the tough trading experienced by shopping centre owners, city office and industrial property landlords are faring relatively well, and are hoping that Australia keeps an open attitude towards immigration, a key driver for an economic recovery.
The Investec Australia Property Fund, that has a $1bn portfolio, reported last week that its holdings in these sectors would be relatively resilient despite the current market uncertainties as most of its tenants were government departments and listed or multinational companies.
Fund manager Graeme Katz says state and federal governments had provided good, largely bipartisan leadership. But he warned against pushing back against immigration dubbing that stance a “seriously short sighted view”.
“Our country needs to send a signal that we’re open for people, we’re open for capital, and we’re open for business, and provide the productive environment for job creation and growth,” he said.
Katz says the country needs the stimulus of a positive migration policy to continue.
“Only growth will provide the environment for job security, which in turn creates a confidence of consumers to spend and the multiplier flow on … will provide a tax base to support a well-balanced economy and society,” he says.
This article originally appeared on www.theaustralian.com.au/property.
