Amazon eyes $1.5bn Melbourne tower as new home

The US online retail giant is close to making a big splash in the locked-down Victorian capital’s office market.

An artist’s impression of the Charter Hall development at 555 Collins Street.

Online retail behemoth Amazon is negotiating a move to a new $1.5bn precinct being developed by the Charter Hall in Melbourne’s central business district in one of the largest office developments since the onset of the coronavirus pandemic.

The move would spark work on a 60,000sq m office skyscraper to be anchored by Amazon, with further space to be taken by government agencies, taking pre-commitments to about 40 per cent and allowing much-needed work to get under way across the city’s stalled economy.

The project was one of the largest fast-tracked by the Victorian government and is a boost for wider plans to reinvigorate the CBD after strict stage-four lockdown rules.

The project will create more than 2000 jobs during construction. Demolition of the site is well progressed and completion of the first stage is targeted for late 2022.

GDP figures released by the Australian Bureau of Statistics on Wednesday showed non-housing construction fell 3.1 per cent in the June quarter and was off 1.7 per cent on the year.

Amazon would come out of its existing building in Exhibition Street that is jointly owned by GPT’s Wholesale Office Fund and Singapore’s Keppel REIT. It d would be take expanded space of 12,000-14,000sq m in the Charter Hall project.

The impending deal is a sign that technology and co-working tenants could support the top end of the office market, with a series of commitments to new towers in Sydney and Melbourne keeping hopes alive even as vacancy levels are forecast to soar as white-collar employment shrinks and companies allow more staff to work from home.

In Sydney, flexible working group Hub Australia has signed up to the new Brookfield development above Wynyard station, and New York-based WeWork is forging ahead with plans to occupy an entire building, despite canning other city deals.

Technology players are also a big driver in Sydney, where there are relatively few other tenants in the market. Atlassian is developing a $1bn tower at a new tech precinct next to Central Station as it is looking to build up its office as a destination for entrepreneurship.

Amazon struck a deal two years ago to shift into a new Australian headquarters in a Charter Hall building in Sydney’s Market Street. It already occupies office space at 2 Park Street, jointly owned by Charter Hall and GPT.

Both Amazon and Charter Hall declined to comment.

An artist’s impression of the Collins St building.

Charter Hall in April won ­approval for the project at 555 Collins Street, Melbourne that will comprise 84,000sq m of premium office space and associated retail. Designed by Cox Architecture and Gensler, it has been pitched as a world-leading tenant workplace experience.

The first tower, at 555 Collins Street, will comprise about 50,000sq m across 34 levels and will house up to 5000 workers when completed. An adjacent tower 55 King Street tower will round out the precinct.

Charter Hall chief executive David Harrison at the time the project was approved said it was a “credit to the Victorian government that it is working to keep the economy moving by maintaining employment and investment and, in particular, to facilitate the recovery the Victorian economy will gain from shovel-ready projects”.

In Sydney, WeWork opened at heritage-listed 66 King Street, where it is anchor tenant following a $72m restoration. Owned since 2007 by property figure Phillip George, the 14-level art deco building on the corner of King and York streets spans 7300sq m.

Mr George backed the co-working concept, saying the building had been redeveloped as “an exciting co-working, retail and entertainment space” calling out the benefits of being in the middle of the city, near major transport and dynamic spaces.

Elsewhere in the city, Canada’s Brookfield signed up flexible workspace specialist Hub Australia to provide a free premium lounge to tenants in its $2bn Brookfield Place Sydney project above Wynyard station.

Hub Australia will take 4000sq m of space over two levels in the project’s new 27-storey office tower. Co-head at Brookfield Properties, Carl Schibrowski, said there were benefits of free breakout spaces for workers as well as access to premium, pay for service flex space.

“We wanted to bring a great flexible workspace offer to Brookfield Place Sydney to meet the growing demand from businesses for flexibility,” he said.

Brookfield Place Sydney will open in mid-2021.