Construction nears for $1bn Essendon Fields project
Melbourne’s $1 billion Essendon Fields mixed property project is poised to begin construction on 18,000sqm of A-grade office space to meet surging demand for cheaper but high-quality facilities.
Demand is rapidly increasing for office space outside the CBD as concerns rise about lengthening commute times and the need for good facilities in and around work precincts.
Essendon Fields is close to securing precommitment from a government tenant to begin construction on its Arc office project, which will roll out over three phases as part of a strategy of quickly increasing the office space in the precinct, which sits around the Essendon Airport about 10km from the Melbourne CBD.
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“We’ve got 260,000sqm of (net leasable area) across Essendon Fields and about 35,000 of that NLA is office space. By next year we think that will be closer to 60,000,” Essendon Fields chief executive Brendan Pihan told The Australian.
“As far as employees go we’ve got all the amenities they would need, such as doctors, hairdressers, health facilities and retail. And we’ve got 1 million people living within a 15-minute drive, so there is a big talent pool for employers as well.”
Pihan says the prices being charged at Essendon Fields for A-grade space is also a strong selling point for employers, with space going for $350-400 per square metre, compared with about $750 per square metre in the Melbourne CBD and about $600 along St Kilda Rd.
Figures to be released by the Property Council of Australia today will show a 1.5% vacancy rate for A-grade space in the Melbourne CBD and net absorption of 63,068sqm in the six months to July this year.
A similar amount of space is forecast to come on to the market in the second half of 2019, to be followed next year by more than 350,000sq m.
Essendon Fields is owned by two members of The List — Australia’s Richest 250 in the Beck and Fox families, with Andrew Fox running the business for his family.
The precinct houses about 220 businesses employing 6000 people and includes the Hyatt Place hotel and conference centre. Pihan says the hotel, which opened in June 2017, has an average occupancy rate of at least 80%. The precinct, he says, has the largest collection of car dealerships in the Southern Hemisphere. “We’re getting to critical mass now but we still have 75ha of developable land to go,” Pihan says.
This article originally appeared on www.theaustralian.com.au/property.
