Adelaide’s first skyscraper may get ATO boost

The SA capital’s first skyscraper could win over one of the biggest tenants in the market.

Artists impression of the new landmark second tower at the Festival Plaza site . Picture: Walker Corporation

Walker Corporation is hoping to lure the Australian Taxation ­Office to a second tower at its Festival Plaza office precinct in Adelaide, after joining the race to build the city’s first skyscraper.

The ATO is considering a ­potential move from its current home in Adelaide’s City Central precinct, sounding out the market for 19,000sq m of space to accommodate 2000 staff.

The tax office is understood to be considering its options – including a potential relocation, or a lease extension with funds house Charter Hall at its current building on Franklin Street, which it has occupied since 2012.

However, with the ATO looking for a 10- or 15-year lease from August 2027, the timing could pose a challenge for Walker Corporation. The developer has indicated it could have its new tower ready by mid-2027, subject to planning approvals and final tenancy agreements, but that ­appears a tight timeframe given it is yet to secure an anchor tenant.

Other corporate occupiers in the mix include accounting firms EY and PwC, which have later lease expiries that would allow Walker Corporation more time to complete the project.

With few large corporate tenants in the Adelaide market, industry sources say a government precommitment may be needed to get the project off the ground.

“There’s no doubt that Mali (South Australian Premier Peter Malinauskas) is pro tower two – and there’s a bit of scuttlebutt around town that it (state government) might finally make the move from State Administration Centre,” one industry source said.

“It’s looking more likely that the project will hinge off a government precommitment – dealing with private tenants in Adelaide is a bit like herding cats: everyone is too small in their own right.”

Artists impression of the new landmark second tower at the Festival Plaza site . Picture: Walker Corporation

After launching designs for the 160m second tower proposed for Festival Plaza last week alongside Walker Corporation managing director David Gallant, Mr Malinauskas said the state government had made no commitment to the building.

“I’ve made very clear to ­Walker Corporation from the very outset that this is a project that needs to stack up without any (state) government commitments,” he said.

“We’ll keep our options open because we’re out in the market with government ­office space all the time – and that’s a competitive process. If Walker Corporation wants a state government tenancy they’ll have to demonstrate they’re offering a value-for-money proposition.”

However, Mr Malinauskas ­acknowledged that State Administration Centre – which opened in 1968 and currently houses the offices of the Premier, Treasurer and their departments – was an ageing building, and there was some “logic” to moving to a new tower adjacent to Parliament House.

Walker Corporation’s second tower at Festival Plaza would include close to 50,000sq m of space across 38 levels, including 30 levels of office space. It is expected to accommodate about 5000 office workers and another 100 retail workers in lower-floor restaurants, cafes and bars.

The first tower in the precinct was completed last year and is home to Flinders University, ­Deloitte, Westpac and a number of smaller tenants.

Mr Gallant said the developer was in talks with several “blue-chip” corporate tenants.

“In addition to that, it is also the commonwealth that is looking at investing into South Australia off the back of your growth,” he said.

“We’ll have some larger tenants – some tenants that will be 10,000sq m to 20,000sq m – but also we’ll have smaller tenants that have 30 to 40 employees. That’s a good mixture for making a vibrant place where you’ve got large companies and small companies coming together.

“I think we will see the building fully committed before completion – we hope to make some announcements in the next few weeks with some of the major tenants that we’re working with.”