Precinct Projects Way Ahead for Cycle-Savvy Office Players

The board has been all but cleared of office sector players in the wake of the pandemic, but those who remain are taking new approaches. As international capital trickles back into the Australian sector, office projects are making headway, especially in counter-cyclical markets and as a part of major precincts, where office components are stacking up and attracting pre-commitment attention. Walker Corp is p ressing ahead with its $1.4-billion Festival Towers in Adelaide, as well as its $6-billion Maroochydore City Centre—12 office towers and 4000 homes ( pictured )—where the first commercial tower is due this year. The developer is also dipping back into Sydney with its proposed $2.5-billion Blacktown Quarter Precinct , which would add 150,000sq m of commercial space, according to managing director David Gallant. “These projects came online after the pandemic,” Gallant says. “We have seen strong growth in the commercial office enquiry space across all our portfolio and these projects seek to capitalise on the growing demand for high-quality, well-positioned workplaces, owned and managed by a trusted landlord. “Since the pandemic, our ability to adapt quickly to the changing commercial market has paid off … the precincts we delivered during that time are now fully leased, creating opportunities for us to expand with new commercial precincts across Australia,” he says. Cycle-awareness Office markets such as Sydney have been cool for a while and Knight Frank highlights just three major new Sydney CBD completions of more than 25,000sq m by 2029, which will add 163,000sq m of office space. But for developers, timing is everything, especially in counter-cyclical markets. Precision recently won planning consent in Adelaide for a 31-storey, $260-million commercial tower at the rear of 100 Rundle Mall. Its office project was post-pandemic by design, Precision chief executive Shaun Bonétt says. ▲ Rendering of Precision’s approved Rundle Mall project. “The Rundle Mall scheme progressed after Covid, reflecting a cycle-aware strategy [to] advance prime, amenity-rich CBD assets suited to flight-to-quality demand, hybrid-ready workplaces, against a more disciplined new-supply backdrop,” Bonétt says. “The timing is deliberate and positions a high-performance, mixed-use workplace in Adelaide’s CBD as new supply moderates and tenant demand concentrates at the quality end.” Vacancy rates are falling in Adelaide, down to 15 per cent in the first half of this year from 16.4 per cent last year, reflecting a strong appetite for office space. Canberra has had the lowest vacancy rate among the capitals since mid-2021 at 10.7 per cent, according to Knight Frank, only increasing due to new supply. ▲ Rendering of Walker Corp’s Blacktown Quarter precinct. Perth vacancy rate has risen 1.9 per cent during the first half to 17 per cent due to completions in the pipeline, but vacancy rates are expected to fall. This changing and challenging landscape has created attractive entry points for developers and investors with a longer-term outlook. But the real trick to ensuring strong take-up going forward is taking a precinct approach, Gallant says. “Our pipeline remains strong because every project we deliver is part of a bigger precinct, creating places with jobs, homes, shops and green space, which is how cities grow in a way that is sustainable, connected and vibrant,” he says. Pre-commitments and feasibility While Bonétt says it is too early for Precision to disclose the Rundle Mall project’s pre-commitments, the feasibility question is always a key concern and the uncertainty of future takeup has made office a no-go for many developers. “Our approach is based on rigorous, disciplined feasibilities, aligning delivery to demand, and prioritising prime, amenity-rich CBD locations” says Bonétt. “This discipline de-risks execution and strengthens lender confidence.” Walker’s Festival Square development in Adelaide that began during the pandemic was fully leased before completion, with Allianz, Westpac, Flinders University and Origin Energy among those signing up for space in Festival Tower. ▲ Rendering of the Festival Plaza project by Walker Corp in Adelaide. “Strong pre-commitment came from our ability to deliver our vision of a world class precinct, businesses want confidence that what they’re buying into is what they will get, what amenities their staff will enjoy and how team productivity will benefit from the commercial space they’re in,” Gallant says. This approach also attracted Unitywater as an anchor tenant to Walker’s 50 First Avenue Office Tower in its Maroochydore City Centre development, he says. “They were drawn to the broader city centre vision, as well as premium features like concierge services and end-of-trip facilities, amenities usually reserved for capital cities, not regional markets,” Gallant says. “By setting a higher benchmark than our competitors, we’ve been able to secure strong pre-commitment across our towers.” Post-pandemic offices The trickle of offices coming through provides blueprints for what the long-term post-pandemic office could look like, when traditional office markets come back online. CBRE reports that smaller-sized companies display the strongest appetite for office footprint growth, and the flight to quality continues, changing the way developers are looking at offices. “Our design lens emphasises adaptable floorplates for ever-evolving workplace needs, [which include] high indoor-environment quality like air quality, daylight and acoustics, as well as end-of-trip and active-transport facilities and low-operational-energy base-building systems,” Bonétt says. ▲ Rendering of Precision’s Rundle Mall office podium. “These priorities reflect what Australian occupiers continue to focus on in the hybrid era and our commitment to healthier, more sustainable workplaces that stand the test of time.” Gallant says that Walker too is seeing a clear shift of businesses encouraging employees to spend time in the office. “But only if it is a high-quality space that supports culture, collaboration and productivity,” he says. “Great workplace design is a tool for talent attraction and retention, building culture and driving business outcomes. “Quality time in the office is so important for helping young staff grow, collaborate and learn within their teams.” ▲ Allianz signed a 10-year lease for Walker’s One Festival Tower in 2023. Wellbeing and performance are also key to what is the first trickle of a new wave of office spaces that are more holistic. “The modern workplace has to be flexible and cater to the way people live and work, and that’s exactly how we approach design,” Gallant says. Which is why precinct integration has been so central to Walker’s office strategy. “This approach is what makes our projects stand out in counter-cyclical markets like Adelaide, the Sunshine Coast and Western Sydney where demand for quality workplaces is only getting stronger.”

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