ATO in market for office space in Adelaide in potential move from Franklin St HQ

The ATO is considering its future at one of Adelaide’s largest CBD towers, as it slashes its office accommodation requirements.

The Australian Taxation Office is considering its future at one of Adelaide’s largest office towers, as it slashes its accommodation requirements in the South Australian capital.

In a request for proposal issued to the market last month, the tax office announced it was on the hunt for 19,000sq m of office space in Adelaide’s CBD, to accommodate 2000 staff, well down on the 33,000sq m it currently leases on Franklin St.

City landlords and developers have until October 3 to pitch their offerings to the ATO in what will be one of the largest office leasing deals in Adelaide in recent years.

According to documents detailing the new office requirement, the ATO is looking to enter a 10 or 15-year lease for 19,000sq m, starting in November 2026, or August 2027 if an integrated fit-out is proposed.

The ATO’s current home in Adelaide on Franklin St. Picture: Giuseppe Tauriello

Funds house Charter Hall will be hoping to retain the ATO at its current home in Adelaide’s City Central precinct, which it has occupied since the tower was built in 2012.

The tower – jointly owned by Charter Hall’s Direct Office Fund and its ASX-listed Long WALE REIT – has been managed with a strong focus on sustainability, achieving a 6 Star NABERS energy rating, which aligns with the sustainability standards set by the federal government’s Net Zero in Government Operations Strategy.

Charter Hall also has plans to do further sustainability upgrades to the building.

“As current office values are generally 30 per cent below the replacement cost of new buildings in all national markets, we expect to be able to meet one of the most critical government requirements regarding value for money and sustainability requirements, when compared to any new development in any location nationally,” Charter Hall managing director David Harrison said.

From July 2025, larger federal government leases can only be entered for buildings that have at least 5.5-star NABERS base building and/or energy ratings.

The threshold increases to 6 stars for newly built offices seeking a federal tenant from July 2026.

Walker Corporation is expected to make a play for the ATO at its second tower proposed for the Festival Plaza precinct, while Kyren Group’s 21,000sq m development on Franklin St – currently under construction 100m west of the ATO’s current home – could also be in the mix should the ATO decide to relocate.

Artist’s impression of second tower proposed for Festival Plaza, which could be in the mix to accommodate the ATO’s 2000 Adelaide staff.

An ATO spokesman said most of its employees preferred a blend of working in the office and at home, and accommodation that supported flexible working arrangements would be required.

“Accommodation decisions are made to support the ATO now and into the future, while optimising value for money and the use of space,” he said.

“The ATO is committed to helping our employees achieve work-life balance. Working flexibly can support retention, attendance, productivity and engagement.”

The battle for the ATO lease follows a wave of new developments in Adelaide, which pushed the city’s vacancy rate to its highest level since the mid-1990s earlier this year.

According to the latest Property Council figures, the CBD vacancy rate eased slightly to 17.5 per cent in July, down from a national high of 19.3 per cent in January.

Adelaide has the highest rate of vacancies outside Melbourne.

The ATO is currently the major tenant in the 37,000sq m Franklin Street building, but sub-leases a component to other federal agencies.

It was previously Adelaide’s largest office building by floor area, before completion of Charter Hall’s 60 King William St project and Walker Corporation’s first tower at Festival Plaza – One Festival Tower – last year, which both offer close to 40,000sq m of office space.

In considering a potential move in Adelaide, the ATO has underlined a preference to be the only office occupant in a new development, with minimum floor-plates of 1200sq m.

Electric vehicle charging infrastructure is also required, along with 40 car parks.

The ATO has engaged Colliers to manage its new leasing requirement in Adelaide.

Charter Hall is the main landlord in Adelaide’s City Central precinct – an area west of King William St bounded by Waymouth, Franklin and Bentham streets.

GPO Exchange tower – home to BHP – is held in Charter Hall’s Prime Office Fund, while its Direct PFA Fund only recently sold out of the precinct’s EY building in a $84.25m deal to Kyren Group’s Theo Samaras.

The precinct welcomed a new Marriott Hotel last month – the last high rise to complete a 20-year development of the 1.7ha City Central site.

Originally published as ATO in market for office space in Adelaide in potential move from Franklin St HQ