Top Melbourne law firm weighs up offer to exit tower of power
Top law firm Herbert Smith Freehills is being courted by developers looking to lure it out of Melbourne’s tower of power, 101 Collins Street, with the under-construction skyscraper at 80 Collins Street emerging as an option for the group.
The lawyers are weighing a shift to the under-construction building with a mooted requirement of about 10,000sqm and any move could drive a bout of new leasing activity at the Paris end of Collins St where Dexus is building up a presence.
Dexus picked up the near-complete 80 Collins from QIC for close to $1.5 billion earlier this year and now the two are finishing it off with a luxury hotel and retail space.
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The site encompasses the existing 52-storey tower at 80 Collins Street, formerly known as Nauru House, and the new tower fronting Collins, Exhibition and Little Collins streets is slated to be finished next year.
The next-generation, 43,000sqm premium-grade tower is drawcard for tenants, with DLA Piper, McKinsey and Macquarie committed.
Herbert Smith is considered a marquee tenant and the potential for it to shift shows the elevated level of activity in Melbourne.
But a deal is yet to be struck and the law firm has been a mainstay of 101 Collins Street.
The iconic building is home to up-market tenants from investment banks Goldman Sachs and Credit Suisse to private equity firms TPG Capital and BHG Capital.
If the firm did move out, landlord AXA Investment Managers — Real Assets would likely rapidly backfill the space as rents have shifted in its favour.
The association with premium tenants in the existing tower could put it at an advantage, sources said, although Dexus may also offer a hefty incentive to fill the space.
Market players suggested rents would be about $800 per sqm on a net basis.
Dexus is also proposing a premium office tower on another Collins Street site it assembled last year.
Herbert Smith occupies about 11,799sqm in 101 Collins Street and declined to comment on Wednesday on a potential shift.
The firm says in a statement that over the past 12 months it has “been reviewing the Melbourne property market in order to fully assess all potential market options, position ourselves in the best possible scenario prior to our current lease expiry in June 2022, (and) determine if we stay or relocate as options”.
This article originally appeared on www.theaustralian.com.au/property.
