US developer Hines’ timber tower sets the trend

US developer Hines is completing its T3 tower in Melbourne’s Collingwood and says there’s growing demand for timber high-rise construction.

An artist’s Impression of the T3 Collingwood tower planned by Hines in Melbourne.

US real estate investment giant Hines said it sees more opportunities in next-generation timber office towers and the build-to-rent market as it completed its first local timber complex.

The group has hit practical completion of its T3 Collingwood building in Melbourne and says demand for such towers is rising worldwide as companies and workers adopt higher environmental standards.

The inner-city building is billed as a unique workspace that will help companies bring people back to the office. Building with timber, as opposed to concrete and steel, results in significant savings in embodied carbon.

“We’re seeing a strong pivot towards ESG adherence, as well as towards core central locations, among today’s tenants — both are expected to underpin growth for the prime end of the office market in Australia,” Hines country head of Australia and New Zealand David Warneford said.

“Demand is there, and we see good locations and premium green buildings leasing,” he said. The block at 36 Wellington St will span 18,200 sqm and will be a 15-storey heavy timber office building that adds to Hines’ global portfolio of 26 timber assets.

“These ‘magnet buildings’ are sustainability-driven, well-located, technologically efficient, and adjacent to transit. They’re more than just office buildings. They’re places for building culture, collaboration, and community,” Mr Warneford said.

He said the company was in talks with tenants to occupy the tower and the first of them would move in early next year.

“With the ESG benefits that come from building in timber and, and now with the leasing momentum that we’re seeing in the market, it’s a real validation of the product,” he said.

One advantage of building with timber is the softer feel it gives offices. “The first thing people do is they go over and they touch a column and they rub it, smell it. And I think it creates a very warm, feeling office environment,” he said. “I think, often, we walk on to more conventional floors and they just don’t offer that same depth of character.”

Companies are also keen to get their staff into offices. “I think they see it as an opportunity to assist with bringing people back to the office and rebuilding that collaborative element that I suppose you sometimes miss when people are working from home,” he said.

The developer may not win an instant premium from building with timber but has got good leasing momentum and is looking at new sites to add to the overall stock of timber office towers. There are a few in Sydney and another in Brisbane. “It’s the tallest timber commercial structure in Australia at the moment,” Mr Warneford said. Hines is separately planning a $1bn traditional office tower at 600 Collins St.