Dexus’ 1 Bligh Street criticised over price, design and views
Criticism has been heaped on the recently completed and not yet fully leased 1 Bligh Street office tower over its office plate design, restricted harbour views and premium rents.
Earlier this month, Dexus reported in an ASX filing that 44% of the building was still untenanted, with an analyst from Merrill Lynch saying it could take up to four years to find enough tenants to fill the state-of-the-art oval-shaped building, jointly owned by Dexus Property Group, the Dexus Wholesale Property Fund (DWPF) and Cbus Property.
Commercial property insiders say the 1,600-square-metre curved floor plates, which each have a bite taken out of them by the atrium running all the way up the tower, is an unappealing feature for tenants considering taking up a whole floor.
In addition, insiders claim that the building offers more restrictive and less impressive Harbour views than other nearby office towers, where rents are significantly cheaper.
Rents are believed to be in the $900 to $1,100 per square metre range for lower floors rising up to around $1,300 for the upper floors.
Office space of up to 2,000 square metres in nearby 1 Chifley Square is being advertised for net rent of between $480 and $500 per square metre.
The 1 Bligh Street building, valued at around $629 million, has a six-star green star rating with standout features being its double-skin façade and glass atrium requiring high rents to deliver a suitable return to its owners.
Levels 17 and 18 in 1 Bligh Street are due to be subdivided to cater for small boutique tenants following a trend emerging across other CBD office towers including Gateway Tower, Aurora Place and Chifley Square, The Australian reported.
Commercial leasing directors say smaller spaces can command higher rents adding as much as a 10% premium.
Its current anchor tenant is law firm Clayton Utz, which has taken 23,000 square metres of space comprising the first 15 levels of the building. The Commonwealth government is believed to be considering taking up to 4,000 square metres of space in the building.
As part of its leasing agreement with Clayton Utz, Dexus agreed to pay the law firms rent at its previous premises at 1 O'Connell Street until the lease expired.
According to a report in The Australian, the bill totalled $50 million.
However, Dexus recently reached agreement with Australian Prime Property Fund and the Abu Dhabi Investment Authority, landlords of 1 O'Connell Street to allow refurbishment of the building. European bank BNP Paribas is reportedly considering taking up 10,000 square metres.