Demand for fringe and suburban office space has increased significantly during the global pandemic with people working from home and this has led to a similar rise in deals being inked by private developers.
As a result, landlords are able to negotiate solid rents, of about $500 per square metre, as companies look to embrace the hub-and-spoke model, whereby they retain the city-based office but are willing to open satellite suburban space as staff opt to work closer to home.
One of the latest deals is by developer Fortis, which has paid about $20 million for a site at 2A Cooper Street in eastern Sydney suburb Double Bay. Upon development completion, the end value will be about $42 million.
Fortis is the development arm of the structured property investment arranger Pallas Capital, which last year bought a corner site on 30-36 Bay Street in Double Bay. It will be the group’s new Sydney headquarters.
Fortis has projects currently under construction or under a planning proposal in Sydney worth about $900 million, with a further $800 million pipeline of work in Melbourne.
‘We have been taking a high-end residential approach to mixed-use retail and commercial.’Fortis director Charles Mellick
Construction on the 386.72-square-metre site on Cooper Street, known as Gaden House, is expected to commence mid-2021 and will see it undergo a $6.5 million upgrade. The transaction was negotiated by Peter Leipnik and Alexander George of BadgerFox.
The heritage-listed site is a modernist masterpiece by architect Neville Guzman. Built in 1968, Gaden House currently comprises three storeys and has three street frontages on Cooper Street, Brooklyn Lane and Bay Street.
Fortis director Charles Mellick said despite people getting used to working from home, they are seeking out an office environment in which to collaborate with co-workers while still being close to home.
“Across all of the commercial we are developing we have included amenity such as landscaped rooftop gardens and end-of-trip facilities. We have been taking a high-end residential approach to mixed-use retail and commercial,” Mr Mellick said.
“We see this as an opportunistic time to purchase sites. They are not necessarily cheaper, but the fact they are even on the market is the opportunity.”
Across town, Sydney’s Burwood is also busy with the 31-storey tower at 7 Deane Street, reaching its highest point. It was constructed by builder TQM, it was “topped out” on Wednesday and will be the highest tower in the area.
Ray Younes of Younes Property said the Burwood site will comprise 154 units, being a combination of studios, one, two and three beds and two double storey 4-bed penthouses, with three levels of commercial and retail spaces and five levels of basement parking.
Coombes Property Group’s One Hurstville Plaza has also been topped out and will start fitting out the office component.
Coombes Property Group director Michael Coombes said the company was “delighted” to be delivering a high-quality mixed-use tower in such a strategic location in the Hurstville CBD.
“We have a lot of confidence in Hurstville and we’re particularly proud of the various social, economic and planning benefits our project will create,” Mr Coombes said.
JLL’s managing director and head of office leasing (NSW) Daniel Kernaghan and office leasing associate (NSW) Mike Urwin are leasing the tower. Ganellen has managed the construction of One Hurstville Plaza since October 2018.
It was designed PTW Architects and is a 14-storey mixed-use development with 8400 square metres of A-grade office space over 11 floors, 1800 square metres of retail space over three podium levels, and aims to achieve a five-star NABERS Energy rating.
“Significant investment by Georges River Council has turned the area into a vibrant business and cultural hub. Sustainable existing improvements to transport and future urban regeneration developments will be implemented,” Mr Kernaghan said.
“This well-connected location has a large catchment for talent. It is an exciting environment for business and the wider community to collaborate, meet and do business.”
Mr Urwin said Hurstville is transforming into one of Sydney’s cultural and corporate hubs, bringing new opportunities, changing the landscape and challenging perceptions.
“There is strong population growth forecast with an expected increase of 19.5 per cent between 2017 and 2036,” Mr Urwin said.
Source: Thanks smh.com