Amazon signs up for Charter Hall’s planned $750m Melbourne office tower

The real estate investment trust purchased Telstra’s Pitt Street telephone exchange, a 16-storey commercial building at 76-78 Pitt Street in the centre of the Sydney CBD, for $281.5 million via a sale and leaseback arrangement to the phone company and acquired a $28.1 million Bunnings shed under development in Caboolture, Queensland. It also completed the purchase of a pub leased to Endeavour Group in Darwin, the Parap Tavern, for $9.8 million.

Charter Hall also gained planning approval early this year through Victoria’s Building Recovery Taskforce – part of the state’s pandemic economic stimulus – for two towers on the Collins Street site, which will house about 7500 workers.

The second, smaller tower will have 32,000 square metres of office space. Both buildings will sit in the group’s flagship CPOF office fund.

Charter Hall would not confirm the leasing deal with Amazon, but sources with knowledge of the transaction were firm. Amazon has been contacted for comment.

The fund manager confirmed Lendlease Constructions will be its building partner on the 555 Collins Street project, following its successful completion of the 60,000 square metre premium grade Wesley office tower at 130 Lonsdale Street in June.

“We expect a flight to high quality modern office buildings as tenant customers refine their workplace to meet the changing appetite for modern, technology and health/hygiene driven accommodation requirements,” Charter Hall’s managing director and chief executive David Harrison said.

Melbourne lord mayor Sally Capp said the $750 million first stage of the $1.5 billion Collins Street project was a vote of confidence in the future of the city’s economy.

“The city’s economy is beginning its recovery from COVID-19, but city businesses are still doing it tough,” she said.

James Palmer from JLL negotiated the Amazon lease.