Tower power catches on in North Sydney.

August 2, 2007  //  IBM BLOG POST

North Sydney’s recovering office market will get a third new development, after the council approved Investa Property Group’s proposal for a 28,500 square metre, $250 million commercial tower at 40 Mount Street.

Leighton Properties struggled last year to fill its completed, 22,000 sq m twoer at 100 Pacific Highway, but it is now more than 50 per cent leased, after a  3750 sq m commitment from Logica.  Inquiries for the remaining space are believed to be solid.

Defence contractor Tenix is developing a 27,500 sq m building to 100 Arthur Street.  It is expected to be completed late next month and has three tenants signed up.  They are Romap (575 sq m), Laing O’Rourke (5200 sq m) and Tenix itself, which will move its 1300 sq m headquarters back to the address.

Project director Jim Cook said the level of inquiries was steady.  ”I wouldn’t say we’ve been killed in the rush but it’s certainly not dead,” he said.  ”The market is definitely showing signs of improving, from a landlord’s perspective”.

Meanwhile, Mirvac Group is fielding interest from a range of partiess in its 36,000 sq m tower at 101 Miller Street – formerly Optus Tower – including telco Commander, which is seeking 7000 sq m.  The Australian Financial Review recently reported that the Australian Security Intelligence Organisation was close to signing a deal over 9000 sq m at 101 Miller.

Investa’s prime 21-storey tower, designed to achieve five star ratings under Green Star and Australian Building Greenhouse Rating schemes, will be built on 2467 sq m site adjacent to the North Sydney Post Office, bought for $23,85 million in July 2006.  Completion is targeted for 2010, subject to pre-commitement. Tenant representative LPC Australia’s, Geoffrey Learmonth, said Investa had the timing of the North Sydney market “just about right”.

Investa commercial development group executive Richard Johnston said the lack of new supply in Sydney’s CBD would make the North Sydney market “an attractive alternative for tenants seeking large contiguous prime-grade office space”. According to BIS Shrapnel, Sydney CBD prime-grade net effective office rents are forecast to grow 13 per cent to 15 per cent over the next two years. North Sydney prime-grade net effective office rents are forecast to grow 13 per cent to 22 per cent over the same period. North Sydney is Australia’s largest non-CBD office centre and contains about 800,000 sq m of office space.

THE AUSTRALIAN FINANCIAL REVIEW – Paddy Manning – August 02 2007