Sydney, Australia—Leighton Properties has announced plans to develop North Sydney’s first new commercial building in six years. Slated to rise at 177 Pacific Highway, the approximately 430,000-square-foot office tower entails an investment of 400 million AUD (about $356 million).
Upon completion in the first half of 2016, Leighton Properties will occupy over 76 percent of the building’s office space. The company has also agreed to purchase the asset from private developer Winten Property for an undisclosed amount. Jones Lang LaSalle and CBRE are the exclusive agents for the sale of the property.
“The development fits with our core competency of CBD commercial development and our strategy to leverage the Leighton brand, certainty of delivery and credit rating together with our space occupancy needs to attract investment partners to our projects. The project will be underwritten by Leighton, which will take a head lease over 76 percent of the office space. The remaining 10,000 sqm [nearly 108,000 square feet] in the tower’s sky rise will be available to other corporates, meeting demand in North Sydney, a market that is experiencing record low vacancy rates,, Mark Gray, managing director of Leighton Properties, says.
Designed by award winning architecture firm Bates Smart, the 30-story skyscraper aims to achieve a 5 Star Green Star – Office Design v3 and a 5 Star NABERS Energy rating.
“Leighton Group Companies currently occupy over 40,000 sqm [more than 430,000 square feet] of office space in Sydney, both corporate and project, across 11 buildings of differing quality, density, fitout and age. The potential for a high performance workplace that consolidates our corporate and operational office spaces with shared facilities and high amenity will drive a more efficient and collegiate working environment that embodies the company’s values of discipline, integrity, safety and success,” adds Hamish Tyrwhitt, CEO of Leighton Holdings.
According to Paul Noonan, head of sales and investments at Jones Lang LaSalle, there is a basket of only 48 assets in Australia that feature investment characteristics similar to the 177 Pacific Highway office tower in North Sydney.
“We expect significant interest for core product such as 177 Pacific Highway from both onshore and offshore groups. There is still very strong capital chasing limited core CBD opportunities within the Australian market,” Josh Cullen, national director capital markets at CBRE, says.
According to a recent report released by Colliers International, the limited availability of high quality office space across the North Sydney market has generated continued rental growth over the past few years. Effective A-Grade rents increased by as much as 14 percent during 2011 and by 4 percent over the past year, a growth that continues to exceed that seen in the majority of Australia’s other office markets.