Lendlease chief Dale Connor to pursue development and fund management opportunities

Lendlease Australian chief executive Dale Connor at Barangaroo. Picture: John Feder/The Australian.

Once known primarily as one of the country’s biggest builders, Lendlease is looking to grow beyond its construction roots and lay down new foundations in development and funds management.

The company’s local arm – now united under the control of former construction boss Dale Connor – is certainly not eschewing its roots.

But the company is looking to carve a new path in development and funds, shown in deals over just a few months in which it has invested in a $330m office development in North Sydney and one its funds has taken a slice of a $420m Brisbane tower with Marquette Properties.

Both moves are signs of a more nimble approach as the company redraws its integrated model in the wake of a messy exit from the high risk business of engineering.

Connor says the company will still look to apply its traditional strengths in construction as well as chasing the new style of deals.

“A key thing for me is really giving life to our integrated model,” Connor says. The building veteran says that this element is still “wrapped around” the company’s approach to property.

And he wants each element of the business to co-operate to find new opportunities, although the company could also pick up projects where it is not the builder.

Although Lendlease’s exit from engineering was traumatic Connor says the company still has strong capacity in areas such as over-station developments.

Lendlease is again chasing an anchor tenant for its $1.2bn Victoria Cross complex in North Sydney and is keen to work more around the “intersection between transport and property”.

North Sydney’s Victoria Cross development will be perched on top of the station,

In Melbourne, it is undertaking the development above Town Hall station, adjacent to Flinders Street station, which will sport top shopping and offices.

Back in Sydney, it is also building the new Sydney Metro Martin Place integrated station development, with two landmark buildings rising above.

Tunnels are out but building above around stations is on table.

“If you look into the future, (there is) Sydney Metro West and the opportunities that arise from Hunter Street to Rozelle, right the way out to Parramatta,” Connor says. “It’s certainly something that we’re interested in looking at.”

Melbourne’s coming Suburban Rail Loop and Brisbane’s Cross River Rail also present opportunities.

Connor says the key is that projects need to work from a transport perspective with development plays to follow.

And Lendlease will face fewer top tier competitors for some spots as building costs have soared and some builders have collapsed.

Connor says the company is across its supply chain with a deep understanding of the “almost weekly” changes around the world.

“If you’re keeping across all of your lines of suppliers, supply chain and products, you’ve got a chance to manage it,” he says.

It is not just stations. Lendlease is also among the runners on Melbourne’s Queen Victoria Market precinct renewal. It could again take a partnering approach.

Connor says this is a key strategic change.

“We are trying to be far more open in terms of partnership capital,” he says.

“We are looking at ‘what can Lendlease bring to an opportunity?’ And then hopefully see opportunities come to us because of that.”

Connor remains a believer in big cities and says business is demanding workplace environments which are attractive to their teams.

“I do think that there’ll be a flight to quality,” he says.

Dale Connor says the company will still look to apply its traditional strengths in construction as well as chasing the new style of deals. Picture: John Feder/The Australian.

And there will be a need to overhaul underused city areas as some B-grade buildings are left behind.

“But we’re still very much a believer in cities and the CBD and what they can still generate.”

Rather than a shift away from metropolitan hubs, he sees big shifts on the capital side as local superannuation funds consolidate and offshore capital looks for a home.

“We are looking to help them come into Australia and look at different types of opportunities. What they’re seeking is product. We’re in a very strong position to be able to create product,” Connor says.

Lendlease has emerged as a reasonably large industrial player with a longstanding fund and a new tie up with Morgan Stanley.

Connor admits pricing may be approaching a peak but says it still makes sense.

There is also a chance to turn around some long-held regional malls, with Connor saying that work is well underway on releasing their mixed-use elements.

After the success of Sydney’s Barangaroo, Lendlease is also partially in restocking mode. And it is taking a wide remit.

Connor says the company is starting to look at build-to-rent and also wants to do more in social and affordable housing.

Lendlease is also targeting innovation-based real estate.

“We’ve launched some investment vehicles around data centres and life sciences globally,” Connor says.

In the new Lendlease don’t be surprised if some of that innovative spirit comes back home.