Victoria Gov’t Gives Nod To A$1bil Melbourne Office Tower
AUSTRALIA – The state government of Victoria has granted approval for 600 Collins, an upcoming office tower in Melbourne with a development budget of A$1 billion, reported The Australian Financial Review (AFR) on Tuesday noon (11 October, SGT).
The approval showed the strength of Melbourne’s office sector, said Simon Nasa, Managing Director at Hines, the owner of the commercial property.
“This approval validates our shared confidence in the continued strength of Melbourne’s central business district (CBD) as a global city and home to Australia’s best businesses.”
Interestingly, the all-electric office tower targets a Platinum WELL Certification, as well as a Green Star Green Building Council rating of at least 6 stars.
“600 Collins will blend cutting-edge technology, market-leading sustainability and the best of modern workplace design to create not just a top-tier office, but a community to bring people together in new and meaningful ways,” he noted.
Hines had narrowed its shortlist of preferred builders for 600 Collins, with construction work slated to start in December 2022. The commercial property is anticipated to be ready by H1 2026.
The company acquired the 600 Collins site in 2020, betting that the future demand for office space in the CBD will prioritise premium office buildings in good locations with high sustainability credentials that offer collaborative workspaces.
This assumption has resulted in Hines competing against Australian office developers for prime sites. Moreover, American investors are being lured by Australia’s office sector, where vacancy levels remain lower than those in the biggest US cities.
While the vacancy rates edged up to 10.1 percent in Sydney and 12.9 percent in Melbourne in 1H 2022, based on the latest data from the Property Council of Australia, these are still much lower in the US.
According to Q2 2022 statistics from Jones Lang LaSalle (JLL), office vacancy levels in New York, Chicago, San Francisco, and Dallas have respectively increased to 15.9 percent, 22.1 percent, 22.4 percent and 23.6 percent.
The diverging trends in office markets across the globe have led to competition among the world’s largest investors for office buildings in certain markets.