Stockland have lodged plans for a 55 level office building at it’s 110 Walker Street North Sydney site as it joins in the bid to lure workers out of the home office.
The $511 million tower will become the highest commercial tower in North Sydney and will consist of 75,000sqm of net lettable area on a 2,300sqm site with unobstructed views to the east from the higher levels.
Stockland have held 118 Walker Street for a long period on a relatively low cost base. In November 2019, the group acquired 118 Walker Street from Menora Nominees (historically related to Stockland founders) for $86m and 122 Walker Street from Talish P/L for $35m, announcing an intention to develop the site for an office building.
The development continues the transformation of the North Sydney CBD following the Nine-anchored tower at 1 Denison Street by Winten Property Group and Dexus’ new 100 Mount Street, all spurred on by the NSW Governments Sydney Metro project.
According to the Property Council, 98,026 sqm of floorspace was expected to come online by the end of 2020 with a further 90,937 sqm of firm floorspace to be delivered between 2022 and 2024, leading up to the completion of the Victoria Cross Metro Station.
Annual absorption statistics for North Sydney is historically very low due to a very low level of supply over the past decade and the lack of public transport to the CBD. The new Metro is expected to change this, with North Sydney set to appeal to a wider business group.
Stockland have designed the building to attract a large tenant (circa 20,000 – 30,000sqm) out of the Sydney CBD whilst also providing flexibility to offer a range of smaller spaces for tenants with an average floor plate size of 1400sqm with a side core layout.
According to Knight Frank, Prime (Premium and A Grade) rents in the Sydney CBD are around 42% higher than North Sydney $972/sqm gross face) and Secondary office rents in the Sydney CBD are around 22% higher than North Sydney ($831/sqm gross face).
The significant premium for Prime office rents in the Sydney CBD presents an opportunity for the North Sydney CBD to attract large corporate tenants that will be able to take advantage of quality office space, in a high amenity location with premium harbour/CBD views.
The building will largely compete with Lend Lease’s Victoria Cross Over Station Development which will also offer 55,000sqm of A Grade office space with 1,600sqm floor plates by 2024, but which will have inferior views to Stocklands project.
The proposal will seek to incorporate a range of design elements to appeal to tenants including the usual end of trip facilities, child care facilities, ESD design, but also a roof top garden, restaurant and bar on Level 52 accessible to tenants via dedicated express lifts from the through site link lobby.
Skygardens and bars are always difficult to justify commercially, vs an office rental, however it may be necessary to offer in order to compete in the market.
Louise Mason, CEO Commercial Property at Stockland said: “We’re excited to work with the design experts at Hassell and prospective major tenants to delve into what a workplace of the future will look like, to refine our vision for a post-COVID office space that will address the changing preferences of workers and complement an evolving North Sydney. A core part of our strategy is to increase exposure in a measured way to quality workplace assets, and while current office market conditions have deteriorated, this application is one step in a long process which provides value enhancing optionality.
“We continue to foresee future demand for quality workplace assets along the east coast, and expect tenant demand for new, contemporary workspaces with large, flexible floorplates which allow tenants to shape the workplace to suit their people, culture and business needs in a post-COVID environment.”
The new Walker St building proposes the highest standard of sustainability, wellbeing and employee facilities, and the potential for integrated green spaces within the building. If approved, the DA will be valid for five years, giving Stockland the flexibility to progress the project in line with demand and market conditions.
As well as the Victoria Cross project, there are a number of other projects in North Sydney also targeting smaller tenants, including;
- 88 Walker Street – Billbergia’s development (rising to 48 storeys) currently under construction, comprising a Hotel (low rise) and 12,000sqm of office space in the high rise
- 118 Mount Street – CBRE Global Investor’s recently completed building for Zurich which has approximately 7,000sqm of available space.
- 173 Pacific Highway – by Maville Group with 9,980sqm of space
- 2 Blue Street – by Thirdi with 13,811smq of space
The project is yet to be reviewed by Council and it expected to see opposition from residents in the nearby 79-81 Berry Street, many of whom will lose valuable water views.
The project does however conform to the latest North Sydney LEP and DCP with the exception of some minor elements which Stockland are hopeful of overcoming.
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