Charter Hall Wins Lucrative Government Lease

Nearly 2,000 public sector workers will move to the southern end of Sydney’s CBD, with a number of NSW government departments consolidating to the Charter Hall-owned 231 Elizabeth Street.

Charter Hall confirmed that its $5.4 billion wholesale Prime Office Fund secured the lucrative 12-year Property NSW tender.

The lease is the first Sydney CBD location under the NSW government’s decentralisation policy, which involves the amalgamation of government leased office space into flexible office hubs.

The Property NSW announcement comes soon after it confirmed it would lease 43,800sq m of A-grade office space at Walker Corporation’s $3.2 billion Parramatta Square.

The government will take up 13-storeys in the 15-storey office tower, filling 21,700sq m over levels two to 13 and taking the hub to 100 per cent leased.

After Charter Hall's current lease with Telstra expires, the A-grade tower will undergo a $260 million refurbishment to create a “bespoke” offering for the government. The refurbishment will include the lobby, improved inter-floor connectivity and sky terraces with a focus on wellbeing amenity.

Related: Charter Hall's $1.5bn Collins Street Development

Charter Hall fund manager Matthew Brown said that the long-term lease increases the fund’s overall weighting to government tenants to 27.5 per cent.

“We have now converted two Sydney CBD office towers acquired in the last two years from an average WALE of two years to an average WALE of 10 years,” Brown said.

Charter Hall acquired 231 Elizabeth Street in late 2017 for $340 million from Chinese investors. The buy follows the Prime Office Fund’s $804 million purchase of two major commercial assets in Sydney’s Barangaroo.

The 23,275sq m building is located in the mid-town precinct of Sydney’s CBD and sits on the corner of Elizabeth, Bathurst and Castlereagh Streets.

The 12-year government lease, which includes two five-year lease options, commences in May 2020.