UBS shift to spark Chifley’s new $2bn tower as cities recover around the nation

Corporate Australia is making a return to cities with new buildings being sparked as they get staff back to their desks nationally.

Investment bank UBS will shift its headquarters into Chifley South in Sydney.

The gun has been fired for the race across corporate Australia to get staff back to their desks with Swiss investment bank UBS to anchor the development of a new $2bn block that will rise beside Sydney’s famed Chifley Tower.

Sydney and Melbourne were slugged harder than other cities by pandemic-related lockdowns, but both developers and big companies are committing to modern buildings that will entice workers back to their desks.

The project, by Charter Hall, will see a twin skyscraper erected next to Chifley and mark the first of the wave of new office buildings as the economy reopens.

The tower is the largest commercial development to win a tenant and get started since the onset of the pandemic, topping even the $1.2bn headquarters Lendlease is developing for Medibank in Melbourne.

The bank is pre-committing to the project even while it is in the midst of securing planning approvals in a sign that large spaces may become harder to get in coming years.

Big landlords including Dexus, Mirvac and Lendlease are moving into gear and have proposed next-generation office buildings, while Macquarie Group is well into building in Martin Place.

New towers are being designed to deal with the dramatic changes stemming from the coronavirus crisis, which will help rejuvenate central business districts.

Chifley is one of the top addresses in corporate Australia. An overhaul has been on the cards since 2019, when two Charter Hall funds joined with Singapore’s sovereign wealth fund GIC in owning the leasehold of the $1.8bn ­complex.

Charter Hall secured major precommitments at the new $2bn Chifley South development at 2 Chifley Square in Sydney, with UBS committing to move from its existing tenancy in the original tower. Charter Hall will also relocate its headquarters from 1 Martin Place.

The development will sport top sustainability features, including a commitment to Climate Active Carbon Neutral certification for Chifley South, and the whole Chifley precinct to run entirely off renewable energy.

Charter Hall managing director David Harrison said the precommitment showed “the opti­mism in the future of the work­place”.

“I believe Chifley represents the pre-eminent commercial site in Australian CBD markets, sitting atop the hill of Sydney CBD with expansive views across Sydney’s beautiful parks and harbour,” he said. “It will be enhanced as an icon within the Sydney CBD and will enhance the city’s skyline.”

Charter Hall is a big believer in cities coming back. The firm’s ­office CEO, Carmel Hourigan, said as “cities re-emerge and businesses bring their people back to the CBD, there has been a clear flight to quality”.

The return to office is turning into a “snapback”, with Sydney’s re-emergence from this year’s lockdown 50 per cent faster than last year, according to CBRE.

The firm’s analysis says “return to work” models being used by big companies are contributing to the city’s quicker recovery, which is ­estimated at four to six weeks, roughly half the time it took for businesses to reopen after the initial lockdown in March last year.

“It’s interesting to see that ­office reactivation and recovery is much faster than in 2020,” CBRE senior research analyst Nick Baring said.

“The rebound time has reduced by half and can be attributed to a number of factors, such as occupiers being more efficient and drawing on previous return to ­office plans, NSW reaching its vaccination threshold and having a greater understanding of the virus.”

The trend is national. Consultancy Urbis, which has analysed mobile phone activity across capital cities, says that moving into November it started to see a rebound in activity.

Sydney, Melbourne and Canberra are now sitting at about 50 per cent of pre-Covid 19 activity levels for office workers and are continuing to climb. Brisbane and Perth have continued to increase and are sitting at 74 per cent and 76 per cent, respectively, of pre-Covid levels.

Urbis says that while the Christmas break and long leave balances will affect office worker activity, it expects this to continue to rise after January as the nation settles into a “new normal work routine”, which could rise to a ­national average of more than 70 per cent of pre-Covid 19 levels.