Towers in store in post-crisis city come back

A new wave of buildings are being promoted by developers that say that have changed in the wake of the coronavirus crisis

Property developers are stepping up the push for new city towers nationally in the expectation that office staff will return and apartment living will also surge as people are drawn back to city centres in coming years.

Developers are putting up schemes designed in the wake of the pandemic that offer more flexible offices and ways of buying and renting city properties, but many are stuck trading at a discount.

But they must face up to higher vacancy levels which will drive up the incentives required to attract new tenants, and investment bank work arrangements were here to stay.

The bank’s property team said that companies, including the GPT Group, Mirvac and Dexus, were trading at a discount, but there was support from the direct property market to back capital values. They are stuck trading at lower levels while rents are under pressure.

“Equity market [are] earnings focused and continue to discount office-exposed REITs,” Credit Suisse said. But developers are now putting up schemes designed in the wake of the pandemic that offer more flexible offices and ways of buying and renting city properties.

Mirvac has just won planning approval for a new mixed-use precinct at 7 Spencer Street on Melbourne’s Northbank, paving the way for building to kick off later this year.

The development will include a 45,000sq m office tower and a build to rent building, known as LIV Aston, with 472 apartments designed for renters.

Mirvac is pitching the project as focusing on wellness, sustainability and amenity, with “green retreats” for workers and residents. The development can accommodate about 5000 workers when complete in 2024.

Mirvac chief investment officer Brett Draffen said the precinct represented a once-in-a-generation opportunity to unlock the value of the inner-city site.

The 32-level build-to-rent tower will have units ranging from studios to three bedroom apartments as well as a pool, gym, co-working spaces, multimedia and wellness rooms and business lounges.

The office tower will have 20 levels, with floor plates of up to 3000sq m, and also sport sustainability features.

The project is among the first complexes to combine offices and build to rent as it is a new concept in Australia.

“We believe the growth of the build-to-rent sector will change that dynamic and give renters the control and customer care they deserve,” Mirvac build-to-rent head Angela Buckley said.

Meanwhile, Charter Hall secured federal government agency Services Australia as the major pre-commitment tenant at a new $450m project in Adelaide’s CBD in the largest leasing deal of the year.

The 10-year lease to Services Australia at 60 King William Street is one of SA’s largest office precommitments, covering 28,500sq m across 10 floors.

More than 2200 staff will move to the new complex in 2023. The building will sport innovative features including touchless bathroom amenities, a wellness centre and 3000sq m floor plates.