The team behind a boutique office development in Sydney’s tightly held southern fringe is considering a “build it and they will come” philosophy, rather than wait for pre-commitments from prospective tenants.
The development application-approved, premium-grade building in Flinders Street, Surry Hills is looking for tenants, but brokers behind the project say the heat in the market is such that they will consider breaking ground without lease commitments.
“Every tenant we get inquiries from wants to be in Surry Hills,” Justin Rosenberg of Colliers, who with CBRE has been charged with marketing and leasing the building, said.
“It’s got very, very low supply at the moment and demand is high and new developments are leasing really well.
“If I’m playing it safe we will wait until we find someone but we’re having those conversations about speculative building,” Rosenberg told The Urban Developer. “Because if we look at the recent projects that have been spec-built, they have seen success.
“Our advice based on the market is you build it, and they will come.”
Created by Surry Hills diversified property and investment group Stasia, the 3000-sq-m building will sit on prime street frontage on the corner of South Dowling and Flinders streets between Surry Hills, Paddington and Darlinghurst.
The building, with an end-value of up to $55 million, was designed by SJB Architects and will include flexible floorplates across six levels, with the potential to accommodate a single user or multiple tenancies. There will be a rooftop bar, as well as barbecue, yoga and end-of-trip facilities.
Agents have described Surry Hills and the surrounding area as one of Australia’s strongest performing office regions, counting tenants such as Blackmores, News Corp, Sony and global technology companies Site Minder and Safety Culture.
Australian graphic design platform Canva has offices at 110 Kippax Street but earlier this month is thought to have paid around $120 million for an unrenovated vacant office up the road from its headquarters, at 8-24 Kippax Street, Surry Hills.
The area has become something of a magnet for tech start-ups, media, health and financial companies.
Last month, data released by Colliers showed media and communications companies make up about 28 per cent of tenants in all the fringe precincts of Sydney. Information and technology accounted for about 16.3 per cent, and government 12.3 per cent.
However in the southern fringe—which Colliers counts as Surry Hills, Redfern and Chippendale—government made up 25 per cent, information and technology nearly 23 per cent and retail and wholesale about 12.5 per cent.
The southern fringe also boasted the highest rents for both A-grade and B-grade listings.
Colliers’ Rosenberg said they were in talks with a number of interested parties including a wellness group, high-end tech companies and some boutique finance companies.
“But there will be more mature companies, versus start-ups, who have been around a while and who want that flight to a quality, high-end product and will be happy to pay a slightly higher premium,” he said.
