Developers back to the city race as new towers on the horizon

PROPERTY developer Mirvac is showing its faith in city office and development markets and is favourite to pick up the massive Treasury Square site in Melbourne’s central business district.

The project could have an end value of about $2bn and help kickstart activity in the Victorian capital with the developer bringing skills in offices, hotels and even build to rent accommodation to the project.

While the final parameters of the site on the eastern edge of the central business district are yet to be set, there will be three large buildings developed that will establish a new area of the city.

Cities have been slugged by the coronavirus crisis but are returning to more normal uses despite the prevalence of work from home and developers are already positioning for a bounce back under the new conditions.

Top towers in both Melbourne and Sydney sites are trading at premiums and developers are backing cities to make a return, with Canadian giant Brookfield just completing a massive $2bn tower above Sydney’s Wynyard station.

That office project, with a retail hall connected to a new station concourse, also shows the faith of city developers.

Brookfield overhauled the once neglected Wynyard precinct with a premium grade office tower rising above the revitalised Carrington Street. It will house large companies including NAB, Allianz and investment bank Moelis.

Brookfield co-head Carl Schibrowski said the offices were more than 90 per cent leased and the retail areas more than 80 per cent committed.

Mr Schibrowski said there had been strong inquiry on remaining spaces and emphasised that tenants were still chasing top office towers.

Some switched to larger desk layouts and were occupying space less densely but he said there were no wholesale changes in the way they were working.

“There is more collaboration spaces and coming together rather than sitting elbow to elbow,” he said.

Developers are looking to create offices that are a “real attractors” for staff rather than older factory style designs as tenants also ramp up their back to work programs.

”We’re seeing a lot of high quality tenants moving into newer bespoke spaces to be close to customers and close to other business,” he said.