Buzz grows louder in Melbourne office market

Charter Hall Group’s $500 million Wesley Place development.

Melbourne’s central business district office leasing market is firing, with Charter Hall Group’s $500 million Wesley Place development close to winning enough tenant support to kick off and Mirvac’s Olderfleet project drawing further interest as work gets under way.

Investment management giant Vanguard is understood to be close to agreeing on terms to take space in the Wesley Place development at 130 Lonsdale St in the CBD’s northeast corner, although a deal is yet to be done.

Preliminary works are underway at the site for a tower spanning 55,000sq m of office space and 4500sqm of retail.

Commercial Insights: Subscribe to receive the latest news and updates

Lendlease has been appointed as the primary contractor for the building that will be held by Charter Hall’s Core Plus Office Fund.

Locking in Vanguard would put Charter Hall close to securing enough pre-commitments to start construction, after super funds Cbus and Telstra Super and advertising group Dentsu were earlier linked to the project.

Vanguard was rumoured to have previously considered Cbus Property’s Collins Arch project before deciding against it and searchings for other options.

The funds house and the developers declined to comment yesterday but Charter Hall is also pushing ahead with a new office tower at nearby 140 Lonsdale St, as well as projects in Adelaide, Perth and Brisbane.

Google is also targeting a move of its Melbourne office into the Pembroke-owned T&G Building at 161 Collins St, although a deal has yet to be finalised

Meanwhile, law firm Norton Rose Fulbright has held talks about a possible move to Mirvac’s Olderfleet development at 477 Collins St. Both the law firm and developer declined to comment.

But the 40-level office tower has already drawn a pre-commitment from anchor tenant Deloitte for more than 22,000sqm of space in the 56,000sqm development.

Mirvac sold a half-stake in the project for $414 million to Singapore-listed Suntec REIT on a tight capitalisation rate of 4.8% that set a sharp benchmark for future deals.

Elsewhere, mining giant Rio Tinto is moving to the Dexus-managed building 360 Collins St. Rio Tinto is taking 362sqm in the tower that is owned by Dexus Wholesale Property Fund and also drew energy giant Shell as tenant. The Anglo-Australian miner has been in its current office at 120 Collins St for more than 10 years and expects its new home to be better suited to its current requirements.

Preliminary works are underway at the site for a tower spanning 55,000sq m of office space and 4500sqm of retail.

360 Collins St is the spiritual home of mining in Melbourne, and previously housed other resources groups, including some that combined to form the group now known as Rio Tinto, such as Zinc Corporation, North Broken Hill and Broken Hill Associated Smelters.

On the same street, law firm MinterEllison confirmed a previously mooted move to Cbus Property’s Collins Arch at 447 Collins St, nicknamed the Pantscraper.

The group is in the design phase and will take about 10,000sqm from 2020 after its current lease expires in the Rialto building at 525 Collins St.

Other law firms committed to moving to Collins Arch include King & Wood Mallesons, HWL Ebsworth Lawyers and Gadens.

The Australian previously reported that Lendlease’s Melbourne Quarter development has been drawing interest, with power retailer EnergyAustralia and financial services giant AMP likely to take space in Two Melbourne Quarter at 697 Collins St.

Google is also targeting a move of its Melbourne office into the Pembroke-owned T&G Building at 161 Collins St, although a deal has yet to be finalised.

– with Matt Chambers

This article originally appeared on www.theaustralian.com.au/property.