Companies seek value and amenities away from centre – Fringe Dwellers Spurn City
Though office vacancy rates in Sydney’s CBD are rising, the market is tighter on the fringe, where two developments worth close to $100 million are being snapped up by investors.
The latest figures released by CB Richard Ellis show that in the year to July 2008 city fringe vacancy fell by 60 basis points to stand at 5 per cent. This is below the total suburban office vacancy rate of 7.7 per cent.
Given the lack of development in the area around Potts Point and Woolloomooloo, the vacancy rates are unchanged.
More companies have been moving to the fringe districts to avoid paying higher CBD rents and to offer staff incentives such as car parking and campus-style offices.
Google and Accenture are due to move into the new GPT site at Darling Island, Pyrmont, over coming months. They are moving from Darling Park at Darling Harbour, which in turn is being leased by the Commonwealth Bank.
The office space is less structured than in a traditional CBD office block and caters for staff requirements of being an environmentally friendly building surrounded by park lands, not bust city traffic.
While incentives are on the rise in the CBD as vacancies increase, many companies continue to opt for a fringe address such as Surry Hills, Potts Point and Kings Cross; others are moving further out, to Pyrmont and Glebe.
Since monitoring being by CB Richard Ellis in July 2001, city fringe vacancies peaked in January 2005 at 16.2 per cent.
One of the first commercial and retail developments in Woolloomooloo for 10 years is Wharfside, at 2 Dowling Street, on the corner of Cowper Wharf Road, diagonally opposite Harry’s Café de Wheels.
Stephen Bowrey, senior leasing executive at Jones Lang LaSalle, is handling negotiations for the mixed retail and commercial complex. “There has been significant inquiry off market and we are already talking to a number of parties,” he said.
The development will comprise about 1400sq m of office space over four levels. There are also two shops and basement car parking.
Mr Bowrey said that, although there was less credit in the market because of the global financial crisis, the private Fivex Commercial Property had secured funds to develop Wharfside, which is on a former BP service station site.
Nearby, at Kings Cross, another private developer, the Hayson Group, is constructing Era, a seven-storey building at 24-30 Springfield Avenue, to provide 44 strata office suites, 13 shops and a 1000sq m food and produce market.
It has been designed by the architect Frank Stanisic. Construction is well under way and the building is due for completion by November. Settlement for buyers has been extended to March next year.
Ian Hayson already has a larger presence in the area. Last year his company completed a refurbishment of Minto House, on the corner of Darlinghurst and Bayswater roads.
The city fringe districts have also experienced an influx of upmarket bars and restaurants to cater for the changing office demographics.
Ben Hayson and Mark Desmond of Hayson sales, Erle Cramer of Cramer Property Group, Tom Speakman of Gunning Commercial and Warren Duncan of City Commercial Property are seeking pre-completion sales at ERA.
“The conversion of office and industrial buildings into residential apartments in Kings Cross over the years has forced many small businesses to relocate, so ERA will fill a yawning void,” Mr Duncan said. “The space will be appreciated by those businesses that are conscious of the importance of image.”
ERA is the first commercial building to be built from scratch in the area for three decades. It is being built on the site if the old Village Shopping centre and Wax Works Museum.
Mr Duncan said Potts Point was an ideal area for business people because it was well served by trains and buses, and just minutes from the BD and the eastern suburbs.
“This area is in the midst of a revival, and is being transformed at a speed we will probably never see again,” he said.
Sydney Morning Herald – Commerical Property. Weekend Edition 14-15 February, 2009
By Carolyn Cummins – Commercial Property Editor