[+] Fine Dining Throws Office a Lifeline

Savvy office developers should be stumping up the cash for fit-outs of fine dining institutions at the base of their buildings, according to Melbourne restaurateur and property player Chris Lucas. The city has struggled to escape the pandemic-induced doldrums and occupancy remains a challenge for the city’s office asset owners. The latest Property Council of Australia data points to the ongoing challenges, with vacancies in Melbourne increasing from 16.6 per cent to 18 per cent in the first half of 2024. MSCI data also indicates low transaction volumes in the Melbourne market with many older assets being pulled from the market for repositioning or repurposing. Property Council of Australia chief executive Mike Zorbas is one of a growing chorus calling for the state government to call its workforce back into the office. That is something the prolific restaurateur Lucas agrees with. “My personal view is that the Covid crisis has left us with some really deep problems in how CBDs function into the future,” he says. “We’ve got to think long term about how we are going to make our CBDs more vibrant, interesting and relevant places in the future so we can incentivise people to return to the CBDs. “As a nation we can’t afford for our CBDs to be looking second-rate and [underperforming] because they are still the economic heart of our cities.” ▲ Restaurateur Chris Lucas at the Canberra Centre, where he will open Carlotta in October of this year. Top image: Adrian Pozzo, chief executive Cbus Property; Chris Lucas, Lucas Restaurants; and Cian Davis, director, Bates Smart. Image: Jason Edward Lucas Group is expanding its stable of restaurants and moving into office blocks to help revitalise the city’s CBD. “We can play a key role in revitalising the CBD and using what we do to be able to drive workers, shoppers, day trippers and tourists all back into the CBD,” he says. “That’s my fundamental belief, and that’s why we’re working with larger institutions. They have the skill set to develop these large commercial buildings, our skill set is taking those large developments and humanising them.” ‘Developers should be buying amenity’ But many ground floor tenancies of office buildings are empty according to Lucas, who says it comes down to a lack of understanding about the value of those spaces. While people look for personalised and bespoke experiences, the grand foyers of office buildings are “passé”, according to Lucas. ▲ Mills Gorman’s render of Chris Lucas’ new restaurant venture at 19-21 and 23-29 Bourke Street , Batard. As many commercial asset owners look to leasing agents to fill retail spaces Lucas says this is often leading to “poor outcomes” and asset owners should be actively engaging food services businesses. “The bigger the foyer, the bigger the turn off. Big grand foyers are passé, yesteryear. You can’t provide a bespoke or personalised service in those imposing spaces,” he says. “The cost of fit-outs has exploded and the reality is food services don’t have the capacity to pay for this. In our model, we are delivering value to the development and that needs to be reflected. It’s a top end solution that’s going to deliver higher rents, more satisfied tenants and a better outcome and values for your building. “The capital costs should be shouldered entirely by the landholders … we’re delivering value. They should be buying amenity as the developer and they will derive better financial outcomes from their buildings.” Not all projects are equal though. ▲ Bates Smart Architects’ render of the office tower for CBUS Property at 435 Bourke Street, Melbourne. Partnership model with landlords in demand Lucas says he looks to partner with “progressive” developers who will offer him a seat at the table when it comes to designing retail spaces. “We can’t do every project under the sun so it’s about trying to make sure that we focus on what we think are the most suitable projects … that have longevity and are city transformational,” he says. “We must get 10 requests a month from developers wanting to partner with us. They are seeing what we are doing in Canberra and Sydney and saying we want the same for our developments.” Lucas will open his latest venture with QIC, the Mediterranean-inspired Carlotta, at the Canberra Centre, his first in the nation’s capital. The vertically integrated development side of the business is tasked with creating new dining concepts, interior design and fit-outs that are bespoke for the individual assets they are moving into. Lucas says there is fine-grain research and design that goes into each of his restaurants, including mainstays such as Chin Chin and Kisume. The restaurateur is currently working on a standalone French brasserie, Batard , which he went as far afield as Paris to research. ▲ Melbourne institution Chin Chin was expanded out to Sydney. Other restaurant concepts are under development. Funding long-term deals Lucas says he is open to different funding models and leasing arrangements with institutional office developers. “We’re happy to look at JVs, we’re happy to take equity stakes, we’re happy to work with developers on lease structures, there’s a lot of flexibility … but they have to be long-term, 20 or 30 year deals,” he says. “At 80 Collins we have a long-term agreement with QIC . They funded the development in its entirety and they’ve now got one of the best developments in the country. “We’re working on other projects where we’ve taken equity stakes … but we are in a capital constrained environment.” He is currently working with CBUS Property on its 435 Bourke Street project with plans for two venues in the building, which he says will be one of Melbourne’s best office assets once complete. Lucas says CBUS Property is a “like-minded developer”. All about amenity Lucas says he is increasingly being brought into projects at the front end to help ensure the design of retail amenity is hitting the mark. He says the big differentiator in the office landscape in the next 10 years will be amenity. “Office tenants are now looking for interesting experiences and this is where we step in. “We’re starting to develop more big private rooms and big meeting spaces and larger back of house operations to accommodate better product and better services.” Lucas’s empire is expanding outside of his home turf of Melbourne, with restaurants opening in Sydney and Canberra, and deals being worked on further north in Brisbane. While Lucas Group is leading the charge on office-retail partnership, the restaurateur believes the future of office will hinge on retail and dining precincts and the deep value it offers to asset owners. You are currently experiencing The Urban Developer Plus (TUD+), our premium membership for property professionals. Click here to learn more.

[+] Fine Dining Throws Office a Lifeline

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