Docklands growth to push Melbourne A-grade fringe office space to one million square metres

Docklands growth to push Melbourne A-grade fringe office space to one million square metres
Larry SchlesingerDecember 8, 2020

Melbourne’s booming fringe office market will reach the 1 million square metres mark of A-grade office space over the next few years when a number of major Docklands projects are completed, according to research by Savills.

The Melbourne fringe office market includes Southbank, St Kilda Road (the busiest office leasing market in the second quarter of the year) and the new Docklands precinct.

It will have nearly double the A-grade square stock (the highest grade outside of inner-CBD premium offices) of its nearest competitor, the Brisbane fringe market, with 527,325 square metres of A-grade space. Sydney is next with a fringe market of 311,395 square metres, followed by Perth (123,873 square metres) and Adelaide (35,520 square metres).

Currently under construction in Docklands are the 13,000-square-metre new headquarters for Melbourne Water at 990 La Trobe Street, the ATO and Marsh Mercer tower at 735 Collins Street (part of the 185,000-square-metre Collins Square project), the 20,000-square-metre Aurecon building at 850 Collins Street and NAB’s second Docklands building at 720 Bourke Street, featuring 63,000 of office space for bank employees.

New projects that will bolster the fringe market include MAB’s 395 Docklands Drive (40,000 square metres) and Charter Hall and Flagship‘s 685 La Trobe Street (35,000 square metres).

According to a September Colliers report, more than 70% of the 260,000 square metres of new office space set to become available over the next three years is already pre-leased. 

This strong forecast follows a six-month period from January to June 2011, when the Melbourne office market demonstrated the highest level of net absorption nationally.

At the current rate of development the central Melbourne market – comprising the CBD, Southbank, Docklands, east Melbourne and St Kilda Road (now more than 5.45 million square metres of space) – will exceed that of central Sydney ( the CBD and North Sydney), currently the biggest office market with 5.55 million square metres, by 2015.

Savills Australia national head of research Tony Crabb says the 1 million-square-metre milestone is a “testament to the attraction that Melbourne’s office market generally has for local, interstate and international businesses”. 

Crabb says the key factor in the market’s growth has been the availability of development sites which have facilitated the construction of modern, campus-style buildings. 

“These sites have and continue to assist the growth of the fringe market with relevant, modern accommodation which is both affordable and accessible. They have also allowed businesses to upgrade and consolidate into a location offering access to the best available amenity, which are, these days, pretty much essential requirements in the quest to attract and retain quality staff,’’ he says. 

Large tenants requiring space of 10,000 square metres or more have also been a factor in underwriting the viability of new buildings while the diversity of business types has also been beneficial, Crabb adds. 

Melbourne is currently the headquarters for five of Australia's 10 largest corporations – ANZ, BHP Billiton, NAB, Rio Tinto and Telstra – as well as institutions such as the Business Council of Australia and the Australian Council of Trade Unions (ACTU). 

Savills Victorian head of office leasing Nicholas Farley says Melbourne has Australia’s largest container port, Australia’s most important manufacturing sector, a very accessible international airport and very competitively priced industrial land in the west ideal for large-capacity warehousing and supported by the nation’s best road transport infrastructure. 

“These factors, along with those cited above, and Melbourne’s reputation as the world’s most livable city, have also been important drivers of demand for both CBD and fringe office space,’’ he says. 

Besides being the headquarters of two of the big four banks (NAB and ANZ), Melbourne is also home to 40% 0f super funds and 65% of industry super funds.

Photo courtesy of Tourism Victoria

 

 

 


Larry Schlesinger

Larry Schlesinger was a property writer at Property Observer

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