Developers plan post-pandemic office towers

Developers are looking beyond the uncertainty of the pandemic-induced slump in office leasing and occupancy towards future projects.

Billionaire developer Lang Walker and office-focused Abacus Property Group are working through plans for an office tower that will reconnect the heritage-listed Goods Shed site in Melbourne’s Docklands.

Goods Shed North.Credit:

And in the city’s western suburbs, the owner of Sunshine Plaza shopping centre, Kok Leong Lee, has launched a leasing campaign to fill a 15,300 square metre A-grade commercial office tower.

The six-level Gray Puksand-designed plaza development, approved during lockdown in 2020, will sit above the single-storey shopping centre and create 200 jobs during construction. It also includes a 120 place early learning centre, Savill’s leasing director Mathew Kent said.

Melbourne’s west, where there are few suburban offices, has become a focus for satellite towers. ASX-listed Cedar Woods has completed four stand-alone buildings at Williams Landing near Point Cook.

Abacus chief executive Steven Sewell told investors recently the developer was in the early stages of planning to incorporate half of the Goods Shed that it owns into Mr Walker’s adjacent Collins Square development.

Abacus owns the renovated shed at the northern end, leased to the state government, while Walker Corporation owns the southern portion and holds a long-term lease for the land between the two sheds that is under the elevated section of Collins Street.

The sheds were formerly a 19th century rail freight warehouse that was divided in half when Collins Street was extended into Docklands.

To seal the joint venture, Walker Corporation in February acquired a half share of Goods Shed North at 710 Collins Street from an Abacus-controlled entity for $56 million.

The joint venture will build a tower above the existing heritage shed, connected under the elevated portion of Collins Street to Collins Square.

“What you’ll see on both sides of the road will be a development above or around the building that basically enshrines and, if you like, enhances or renovates the heritage component ... and fully integrates it into whatever the end result will be,” Mr Sewell said.

“The prospect, that is in early stages of planning, to incorporate the Goods Shed with the adjacent major Collins Square development is something that really drove our desire to work in partnership with Walker,” he said.

To facilitate the deal, Abacus provided vendor finance to Walker Corporation for up to five years at an interest rate of 5.5 per cent per annum, reflecting Abacus’ current yield on the asset.

Abacus has been in an expansive mood of late. It settled the final tranche for a 32 per cent $202 million stake in the tower at 201 Elizabeth Street in Sydney in a Charter Hall-led consortium. It funded the purchase with a combination of debt and divestment of non-core assets.

The consortium will hold the building with the intention of redeveloping it down the track.

Another Sydney development likely to move ahead is Oxford Properties Group’s 39-storey office tower above Sydney Metro’s future Pitt Street Station.

The Canadian-based fund manager’s plans for an over-station development, lodged in July 2020, were approved recently. The Foster + Partners design puts a 177-metre building with 55,743 sq m of ground floor area including the train station, mezzanine, plant levels and two sky lobbies on the L-shaped block.