ATO backs new $200m Adelaide office building

ADELAIDE will gain a new $200 million office building with the support of the Australian Taxation Office.

ADELAIDE'S newest office building has been given the green light with the signing of a 15-year lease by the Australian Taxation Office.

The lease gives Aspen Group the precommitment it needs to start building Tower 8, the latest instalment in its City Central masterplan.

The Tax Office will take up 30,000 sq m in the 36,000 sq m building, but Aspen would only confirm it was currently negotiating a lease for the remaining area and would not discuss potential lessors.

The project, expected to cost up to $200 million, also involves a fitout that industry sources say could cost up to $50 million.

Aspen's property chief executive Jonathan Timms said the scale of the deal was significant on a national scale as well as sparking ``cranes on the skyline''.

"From an Adelaide perspective, you would have to look prior to the global financial crisis to see anything like this,'' he said.

"Our City Central development is a major component of the Aspen Development Fund and this... is a tremendous result for the fund as well as for the Aspen Group.''

Aspen's City Central development covers the city block skirted by Waymouth, King William, Franklin and Bentham Streets.

Tower 8 is to be built on Franklin St frontage and will provide part of a laneway network with the existing Towers 1 and 2.

Aspen's SA general manager Ben Yates said the deal would cement the project for the city.

"Given we have a precommitment, it allows us to turn our attention to the rest of the site and turn to Towers 4 and 7,'' he said.

"We can also look at other uses for the GPO down the track.''

Development approval for Tower 8 was at first rejected by an Adelaide City Council planning meeting.

The State Government reacted by removing the Council's planning powers for all developments costing more than $10 million.

Shares in Aspen Group were trading 1.5c higher at 51c at 1.30pm, Adelaide time.