No tenant, no worries as Poly forges on with Docklands development
Poly Australia could push ahead with a Melbourne office development even without precommitment from a major tenant, as space in the city’s tight office market remains in high demand.
The Chinese-backed developer is looking for an anchor tenant for its 24-storey office tower at 1000 La Trobe Street in Melbourne’s Docklands, which will span about 31,500sq m of office space.
The site had previously been considered for a residential project that could have housed 600 apartments after Poly bought the land for $32 million from the Liberman family-backed Digital Harbour (Holdings), and the switch comes as lingering clouds over the unit outlook have prompted other developers to repurpose sites.
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Poly Victoria executive director Steve Wang says the group is actively looking for an anchor or whole building tenant.
“This particular building will follow a ‘build to suit’ model,” Wang says. “This means that should we get an anchor tenant prior to construction, Poly will be able to modify the specs of the building based on the tenant’s requirements and needs.”
But with construction set to commence in late 2018, the group could push ahead regardless. “Even though we would like a major tenant committed prior to building, it is not a precondition for Poly to begin construction,” Wang says.
The decision to switch from residential to office comes amid worries about the large pipeline of apartments planned for inner city Melbourne, as well as a buoyant office market with a vacancy rate below 5 per cent as business tenants search for space.
“After speaking with market experts, local authorities and conducting financial analysis, creating employment opportunities within this particular precinct of Digital Harbour was a higher priority,” Wang says.
Developers across the eastern seaboard have been replacing apartments with commercial projects.
Lang Walker has abandoned apartment projects in western Sydney’s Parramatta and Brisbane’s Fortitude Valley and will instead develop office towers.
In Melbourne, a Fishermans Bend site with scope for more than 1000 apartments will instead be used for childcare.
This article originally appeared on www.theaustralian.com.au/property.