Market Square project secures funding, first office tenant

The $400m Market Square project has secured critical funding from an unlikely source after years of delays, while the first office tenant has also been named.

Artist’s impression of the $400m Market Square development in Adelaide. Picture: Supplied by ICD Property

The Victorian-based worker entitlement scheme that took over the South Australian construction industry last year has injected $15m into the $400m Market Square development in a bid to shore up the project, which has been further bolstered by the unveiling of its first office tenant.

The investment by Incolink and announcement of an anchor tenant ease fears about the future of the project, which has been hit with a series of delays, due in part to design changes, uncertainty around the project’s finances and an asbestos find late last year.

Securing tenants for the office component of the project – a joint venture between Melbourne developer ICD Property and Adelaide City Council – has also posed a challenge for developers.

However corporate law firm Thomson Geer Lawyers has announced it will relocate its 130 Adelaide-based staff to the development, with a deal to occupy 2636sq m across the top floor of the nine-storey office tower that will be sit atop a multi-level retail podium.

Thomson Geer will occupy the top floor of the nine-storey office building, atop an expanded Central Market retail complex. Picture: Supplied by ICD Property

Early construction work at the Central Market Arcade site has been slowly progressing this year, and Incolink said its mezzanine finance investment would ensure building work continues “well beyond early-stage works like excavation and site preparation” to “peak construction and employment”.

Incolink chief executive Erik Locke said the funding would provide developers with the ability to secure finance for future stages of the project, and would deliver Incolink with a return that

“flows back into the industry”.

“This will enable us to further invest in services including training to ensure local workers have the skills required by industry.

“This is what has been missing in the South Australian construction industry with the legacy fund not taking an active position.”

Early construction work at the $400m development.

Mr Locke’s comments refer to the SA-based BIRST fund which covered local building workers from 1989 to July last year, when Incolink took over as the mandated fund under CFMEU-negotiated agreements.

The Incolink scheme, which provides redundancy payments, insurance and training programs to construction workers, retains close ties to the CFMEU’s Victorian branch, but in recent years has been seeking to become the national fund of choice for the construction industry.

Controversial Victorian CFMEU boss John Setka is a director of the $1.2bn fund, which disbursed $21m last financial year to the construction union’s new “Training and Wellbeing Centre” in Victoria.

The union has said it plans to make similar investment in SA.

Mr Locke said the investment in Market Square would support more than 1000 construction jobs on the project, and would enable the fund to reinvest in the state’s construction industry.

“As Australia’s largest workers’ entitlement fund, with over $1 billion under management, we’re able to invest funds to create construction jobs and generate attractive returns on investment,” he said.

“We will continue to invest in industry training and a range of industry-leading health and wellbeing services for workers, creating a sustainable and skilled workforce that improves industry productivity.”

Thomson Geer chief executive Adrian Tembel. Picture: Matt Loxton

Work on the Market Square project was originally meant to start in 2021 and be completed later this year.

However according to the latest estimates, the first stages of the project are now expected to be completed in 2026.

The development will feature a hotel, 234 apartments, 21,700sq m of A-grade office space, a 11,000sq m-plus retail precinct and a 3000sq m elevated garden.

Treehouse Hotels – part of the luxury SH Hotels & Resorts group – has been selected to operate the hotel component of the development, while Finnish-style childcare operator HEI Schools will operate a 66-place childcare centre under a 10-year lease.

Thomson Geer chief executive Adrian Tembel said his firm was attracted to the development’s “unrivalled amenity, fantastic location and a strong emphasis on the health and wellbeing of tenants”.

“Market Square is a very special development that our team will gretly appreciate, but equally, it’s a significant project for both the city and the state and we are delighted to support it.”

ICD Property deputy managing director Sal Quah said talks were progressing with several other potential tenants.

“Thomson Geer has signed a 10-year lease which not only validates the project’s vision but also drives its momentum, attracting further interest and investment from top tier and global firms,” he said.

“Only three of the nine commercial floors remain available with the other floors currently under offer or in negotiation and we look forward to making further announcements in the coming months.”

Mr Quah said excavation of the basement level was nearing completion on-site and construction of the lift shafts for the towers would soon begin.

The project is being built by construction company Multiplex.

In March last year, the council approved an additional 21 apartments, more office space and two extra storeys, in a move viewed by many in the property industry as an attempt to bolster the project’s finances.

The amendments came after global construction costs rose by around 20 per cent, prompting council to increase its contribution to the project to $31.92m, $9.3m more than originally planned.