‘Stay Flexible’: Inside 500 Bourke Street Retrofit

“The most sustainable building is the one already built.” And it was that central tenet that drove ISPT to retain its 1977 brutalist asset at 500 Bourke Street in Melbourne’s CBD, according to chief sustainability officer Steven Peters. Peters says strong ESG credentials are now a “non-negotiable” for office tenants and the adaptive reuse and refit of the ageing office block was not only a values aligned decision but also a commercial one. “We acquired 500 Bourke St in 1998 and when we became aware that our anchor tenant NAB was planning to vacate the building in 2021 we realised we had a unique opportunity and were left with a choice as to whether we would knockdown and rebuild, or retrofit and repurpose the building,” Peters says. “Sustainability is a core focus for ISPT so we felt a responsibility to take this opportunity to refurbish the interiors from the ground up, while maintaining the building’s original facade.” Peters says there was strong absorption of space during the building’s construction phase, which had given the asset owner confidence in this path forward. “Our experience with 500 Bourke has led us to look at some of our other existing assets and the ways we can retrofit and reposition them, rather than rebuilding,” he says. “Sixty-one per cent of 500 Bourke was pre-leased during its construction, and we attribute a lot of this interest to its market-leading ESG approach, alongside its leading amenities including FLEX by ISPT, ISPT’s premium end-of-trip facilities FitPoint, and the surrounding precinct which brings together popular dining venues SilkSpoon, Rosa’s Canteen and Movida Aqui.” ▲ ISPT chief sustainability officer Steven Peters: T he 500 Bourke experience has led them to look at other assets. The retention of 500 Bourke Street saved 57,000 tonnes of carbon, the equivalent of 9000 cars off the road—but it was not without its challenges. Architects Fender Katsalidis led the refit of the building. Fender Katsalidis head of design Nicky Drobis sat down with The Urban Developer to discuss the challenges of retrofitting old buildings, something the FK team are seeing as a growing trend in Australia’s capital cities. But it’s not just adding a lick of paint and some modern end-of-trip facilities. “There’s got to be a kind of a more fundamental kind of richer way I think of celebrating and rejuvenating these buildings,” Drobis says. “And it’s the asset holders in our cities who are really driving [retrofitting] because it’s a values based approach.” Drobis says the opportunity to peel back the layers of “modernising” that had been undertaken in the building during its life as NAB’s headquarters had revealed some challenges. ▲ Fender Katsalidis head of design Nicky Drobis: Asset holders in Australian cities are driving retrofitting. “Buildings evolve over time when they are tenanted, and a lot of those changes are not necessarily captured in historical [plans],” she says. “So you are always up for surprises along the way when you start construction on retrofit projects. And you can do all of the due diligence that you desire, but you need to be prepared to be flexible. You need to be up for the challenge because you will be amending, your design and drawing set as you travel through that journey while it is under construction. “And look, some of the surprises are great and some of them, you know, are more of a challenge.” The biggest challenge, Drobis says, is navigating the somewhat “blurry” rules around building codes and their requirements. “One of the key items that we have out there at the minute for retrofit, which is a challenge, is that the BCA (Building Code of Australia) is really driven and set up for new building and new construction and not retrofit projects.” Drobis says the City of Melbourne’s retrofit plan is a “terrific start” but she says to make investment in retrofit strategies stack up for the city’s older buildings, there needs to be more flexibility. And while Australia is increasingly looking to retain buildings and reduce embodied carbon there are countries such as the UK and Denmark where the conversation had entirely flipped. ▲ Drobis says the Melbourne’s retrofit plan is a “terrific start”. “The assessment is now more along the lines of prove to me why your brand new building is going to perform better, than a retention and reuse of your existing building, you know, and we’ve got a way to go again before we get there,” Drobis says. But the fundamentals are there in the pervasive “flight to quality” narrative in the office market, and ESG mandates driving tenancy decision-making. “Thinking about those ESG values further down the chain, what you’re finding is that, you know, those values are aligning with tenants ’ values. So the buildings that are meeting those sustainability targets and exceeding them are very attractive in the marketplace. “ISPT knew in all likelihood, it would be a community of tenants, lots and lots of tenants in the building and that’s a seismic shift from that single tenant and building and what that building then needs to offer that new community. “So again you know we do see that flight to quality, and we know tenants are absolutely looking for wellness spaces, improved end-of-trip facilities, and 500 Bourke Street has an incredible community offer.” Indeed some of Drobis’s team regularly work from the lobby of 500 Bourke Street, which she says is a good endorsement of the vision they had had for a welcoming ground floor space. The office block at 500 Bourke is one of the first net-zero carbon buildings in Melbourne. ▲ The tower, designed by architects Godfrey and Spowers, was completed in 1978. It was formerly the National Bank of Australia’s headquarters. ISPT’s Steven Peters says to achieve this “we maintained low upfront emissions by retaining the structure and facade”. The building targeted a 5.5 Star NABERS Energy rating and a 6-Star Green Star Design rating, omitted fossil fuels in favour of renewable-powered electricity for the base building, and offset any remaining carbon. Peters says the asset owner now has proof of concept for the retention of the right buildings, and it was actively looking at its portfolio for further uplift opportunities. “Our team invested $160 million in retrofitting 500 Bourke, creating a $665 million A-Grade commercial tower that’s now home to anchor tenant TAL, business advisory, accounting and assurance provider PKF, Holding Redlich and Russell Kennedy Lawyers,” Peters says. “Elsewhere across our portfolio, we announced in July that we’d be investing $170 million to retrofit and refurbish 270 Pitt Street in Sydney. This will add another A-Grade, 25-storey tower to inner-city Sydney, and will benefit from its immediate proximity to the new Sydney Metro station. “We have now invested $460 million across 500 Bourke, 477 on Pitt Street and 270 Pitt Street, and will continue to focus on our existing projects and the refurbishments we can do to ensure they’re catering to tenant needs.” ISPT went as far as to remove, store and on-sell 15,000 items of furniture from the building, which Peters says was diverted from landfill and generated $200,000, which was donated to the Property Industry Foundation. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

‘Stay Flexible’: Inside 500 Bourke Street Retrofit

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