Microsoft is set to relocate its head office to a new $1.2 billion building in what will become North Sydney’s tallest tower.

The tech company has secured a 10-year lease on the Bates Smart-designed office building, at 1 Denison, in what will be the suburb's largest premium grade commercial office building.

Originally the site of the North Sydney Shopping World, developer Winten Property Group purchased the site for around $80 million in 2016.

The 39-storey tower, currently under construction by Multiplex, will offer a net lettable area of 61,600sq m and is scheduled for completion by the end of next year.

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Microsoft Australia managing director Steven Worrall says the move will consolidate a number of Sydney offices, including its current head office in North Ryde.

Microsoft will keep its Martin Place "technology centre" which opened earlier this year.

“The [North Sydney] investment reflects Microsoft’s commitment to its Australian employees, customers and partners,” Worrall said.

“Having the flexibility to design and build our own space ensures we can bring our vision of a modern world of work to life.”

Microsoft will occupy seven levels, spanning levels 25 to 31 of the tower, up to 10,655sq m, with plans to move into its new premises in mid-2021.

Winten’s development director Stuart Vaughan said North Sydney has become an attractive tenancy choice for companies “seeking quick access to the city and high-quality amenity without the price tag”.

“We are receiving strong enquiry from media, pharmaceutical and technology related businesses who are not traditionally working in the North Sydney area as well as Sydney CBD based businesses,” Vaughan said.

“More businesses are investing in North Sydney and bringing amenity and hotels to the area including 88 Walker Street and Vibe Hotel.”

Spurred by Sydney’s infrastructure boom and continued growth of the tech sector, CBRE’s recent review of the Sydney office leasing market shows professional services firms, technology and IT tenants have taken a larger portion of office space, overtaking finance and insurance as the city’s top employer.

Colliers International’s head of tenant advisory Simon Crouch represented Microsoft in the transaction, while CBRE regional director Mark Lacey represented Winten.