Quintessential secures AGL for $30m King William St office tower upgrade in Adelaide
Artist’s impression of the new lobby at 100 King William St, Adelaide. Picture: Supplied by developer Quintessential
Property investor Quintessential has secured energy giant AGL as an anchor tenant for a $30m office tower upgrade in Adelaide.
But it admits competition for tenants is proving a challenge for landlords as corporates weigh up their occupation requirements amid a shift to flexible working arrangements with staff.
AGL will shift about 300 staff from its city fringe home on Greenhill Rd to two levels, or more than 3000sq m, of the former Commonwealth Bank building at 100 King William St in the CBD after agreeing to a 10-year lease.
Quintessential paid $71.5m for the 18,460sq m tower in 2021, following the big four bank’s decision to move its Adelaide headquarters to Kyren Group’s new development on Wakefield St.
Artist’s impression of upgrades to 100 King William St, Adelaide. Picture: Supplied by developer Quintessential
It is one of three major office upgrades being undertaken by Quintessential in Adelaide and Sydney, in a counter-cyclical move by the fund manager to capitalise on the so-called “flight to quality” from tenants seeking high quality, environmentally friendly buildings in the aftermath of the pandemic.
Quintessential head of assets Noah Warren said landlords were in an intense battle to secure tenants, and active owners who invested in their buildings were likely to win the day.
“Competition is always hot, and for us it’s how do we differentiate ourselves in the market and make ourselves an attractive offering that’s going to win the race to the occupier group,” he said.
“It’s about that flight to quality and occupiers, be it SMEs or corporates, needing to attract staff back to office – what’s going to retain and attract the best talent, and that’s definitely led by amenity within and around the building.
“So whether that’s F&B, whether that’s retail, whether that’s wellness, and then transport and carparking infrastructure as well.
Artist’s impression of upgrades to 100 King William St, Adelaide. Picture: Supplied by developer Quintessential
“There’s a real push at the moment from occupier groups around technology, and then there’s the ESG theme as well – that’s a really key driver for occupiers to ensure that they’re playing their part in improving the environment and being in buildings that offer green attributes.
“It’s very much going to be a market where those that invest in their assets, those that are proactive are going to win the race to the occupier. And the experience that the buildings can provide is absolutely paramount to being successful.”
Quintessential remains bullish on the Adelaide office market despite the city’s vacancy rate reaching close to 20 per cent – its highest level since the 1990s – following a wave of new developments that have left the city’s older, lower-quality buildings in an uphill battle to secure tenants.
The latest Property Council figures, released earlier this month, revealed the city’s vacancy rate rose from 17 per cent in July 2023 to 19.3 per cent in January, making Adelaide home to the highest rate of empty CBD offices in the nation.
Quintessential is currently working on a $30m revamp of another Adelaide office tower at 30 Pirie St, while in Sydney the Melbourne-based group is planning a $90m overhaul of the One Margaret Street tower following its $293.1m acquisition from Dexus in August.
Mr Warren said Quintessential’s usual hunting ground of Brisbane and Adelaide remained a focus, while Sydney was emerging as a city with opportunities for investors looking to capitalise on the return-to-work trend.
Artist’s impression of upgrades to 100 King William St, Adelaide. Picture: Supplied by developer Quintessential
“The markets that we’re really focusing on at the moment are markets that are effectively tenant-led – in simple terms, if we acquire buildings we’re confident we can let them up,” he said.
“If you look at South Australia’s economy, you’ve got the $100bn-plus defence investment over the next 30 years, you’ve got the tech, cyber and space investment that’s occurring, you’ve got the biomed precinct that’s getting developed – we really like Adelaide and South Australia.
“We are incredibly positive about Brisbane and the infrastructure spend, obviously with the Olympics in 2032, and as the economy ramps up.
“And Sydney as well. We’ve obviously made a significant investment in the Sydney CBD with the acquisition of One Margaret Street and we’re already seeing some real positivity in the leasing market with that building.”
Upgrades to 100 King William St building have commenced, and will include an upgrade of the ground floor foyer, new end-of-trip facilities and business lounge, a facade refurbishment, and the creation of a laneway from King William St to Exchange Place with cafes and restaurants.
AGL will occupy almost 18 per cent of the 17,000sq m of office space in the building, and will have exclusive signage and naming rights.
It will join existing tenants DW Tucker Fox and Commonwealth Bank, which recently agreed to a new 10-year lease for its branch on the ground floor.
The upgrades will be completed in July, ahead of AGL’s move in March next year.
The AGL lease deal was brokered by Colliers’ James Young and Tim Farley.
