Office developers are focusing their attention on suburban areas as major tenants look for alternatives to city centres in the wake of the coronavirus crisis.
Office developers are focusing their attention on suburban areas as major tenants look for alternatives to city centres in the wake of the coronavirus crisis.
With lock downs effectively shutting buildings in Melbourne’s CBD and other cities still relatively quiet, developers are now planning new towers in locations including Sydney’s north shore, which is attracting new projects.
While they will take time to build, developers believe that they will have an advantage in coming years by diversifying their risks away from city towers.
In the latest move, Stockland has snapped up healthcare giant Johnson & Johnson Medical‘s office building in Macquarie Park in Sydney’s northern suburbs, and will also develop a new complex in the area for the US company.
It is one of the largest suburban office deals since the coronavirus crisis struck and could be a pointer to more interest in suburban markets as workers shun CBDs.
Stockland and Johnson & Johnson said they had committed to working towards an agreement to design and deliver a new 10,000sqm head office for the health company in Macquarie Park, that will consolidate the 820 office staff from across Sydney.
Stockland chief executive, commercial property, Louise Mason, said the deal “significantly increases” the developer‘s presence in the rapidly growing and resilient Macquarie Park office market.
“The transaction aligns with our broader strategy to up-weight our workplace and logistics portfolio and build on our $4.4bn development pipeline, particularly through Sydney and Melbourne opportunities that enhance long-term income and valuation resilience,“ she said.
Macquarie Park has already drawn pharmaceuticals, health, technology, government and education tenants.
The four hectare site sits adjacent to Stockland‘s M_Park commercial office project, that is expected to commence later this year and creates a potential consolidated development opportunity of more than $1.5bn.
North Sydney’s office market is also defying predictions of a coronavirus pandemic-induced slowdown with a series of new towers being planned, with the $300m Blue & William tower the latest to win development approval.
The project comprises a consolidation of 40 residential apartments across five buildings at 2-4 Blue Street and 1-5 William Street which have expansive Harbour views of Sydney’s CBD, Harbour Bridge, and Barangaroo.
It is a joint venture between local property developer Thirdi Group and Phoenix Property Investors, a pan-Asia real estate private equity firm.
Thirdi founder Robert Huxley said the firm started to consolidate the site in 2018 with acquisition partner Nick Couloumbis of Couloumbis Property Group. “We used the global pandemic to learn from the challenges that traditional office spaces were facing and ensure our building was designed in a way to deal with a similar crisis in the future,” he said.
Thirdi and Phoenix plan to commence construction in early 2021 and upon completion, over 1800 employees will be housed in the complex.
Colliers International national director Frank Sassine will handle the leasing.
Thirdi Group, with the support of Generate Property Group, confirmed they were in “advanced discussion” with several potential tenants to secure multiple levels in the building.
There has been a string of projects proposed for the area.
Global developer Lendlease last month development approval for the Victoria Cross over station development and will build a $1.2bn office tower rising more than 42 storeys above the future metro station.
Meanwhile, Canada‘s Oxford Investa Property Partnership lodged an application for a major redevelopment of the landmark MLC Building into a $450m project.
That proposal seeks to create a large public domain for North Sydney’s CBD by redeveloping the MLC Building into a revitalised 27-level tower.
Developer Winten is close to completing the new Nine Media headquarters in North Sydney and insurance group Zurich is also developing a new building.
