by Lynne Blundell

As the effects of global economic conditions continue to impact across Australian office markets, with rising vacancies and increasing incentives, two government departments in Melbourne are taking the opportunity to strike new property deals and move to more sustainable buildings.

The Australian Taxation Office (ATO) and Melbourne Water are both engaging property consultants to find larger premises that allow them to amalgamate current offices and that also meet the government’s sustainability requirements.

The ATO has appointed property consultant United Group Services to run an expressions of interest campaign to find new 25,000 square metre headquarters.

An ATO spokesperson told TFE the only stipulation for the new space was that it was located in the Melbourne CBD, which could extend as far as the new Dockland developments.

In terms of sustainability, the ATO would be seeking a building that reflected current government policy and benchmarks.

“Currently the Department of Finance and Deregulation is working with agencies to develop the government’s framework across property management and this issue will form part of the framework,” the ATO spokesperson said.

The ATO is currently spread across five sites in Melbourne – at 350 Queen St, 390 & 414 Latrobe St, World Trade Centre and Casselden Place (Lonsdale St).

United Group Services will project manage the process of seeking expressions of interest, evaluation, and providing advice to the ATO for its decision. The consultant will then work with the successful developer/agent to deliver the final building.

TFE understands the ATO has allowed a timeframe to develop new premises if a suitable existing site is not available.

Melbourne Water is also seeking new headquarters and is in the final stages of an expressions of interest campaign to engage a property consultant. The department is looking to consolidate its city-based offices into a six-star green building – either in the CBD or the CBD-fringe.

Managing close to $9 billion of assets, Melbourne Water’s capital works program for 2008/09 was around $1 billion. Most of its city-based operations are headquartered at 100 Wellington Parade, East Melbourne, a site it has occupied since January 2002.

As the number of major water projects have expanded to deal with drought, Melbourne Water has taken medium-term leases of additional office space at 126 Wellington Parade, 112 Wellington Parade (both in East Melbourne) and 181 Victoria Parade, Collingwood.

The move will allow it to rationalise its accommodation needs into a single building with the total floor space expected to be more than 10,000 square metres.

According to Malcolm Haynes, general manager business, Melbourne Water has set tough targets for its office-based water and energy use and the move to a more efficient and sustainable building is part of this.

“Sustainability is a core principle for us, so moving to a six-star green building is a logical way to meet our accommodation needs.”

“It will bring all our city-based staff together into a single headquarters, instead of being spread across different parts of the city.”

“It’s a good time to be in the market looking for space and we’re keen to see what’s on offer in terms of value and resource-efficient buildings,” Mr Haynes said.

Frank Knight’s leasing director for Victoria, Michael Nunan, told TFE it was good to see government agencies taking the lead in seeking sustainable buildings in the current economic climate.

“Developers and building owners aren’t getting pre-commitments in the current environment and construction has fallen off so it’s important that government leads in seeking sustainable buildings.”

Mr Nunan said that while vacancy levels had only fallen to five per cent in Melbourne, incentives to tenants had increased as businesses put off expansion plans. On the other hand, construction levels had also declined and supply of sustainable buildings was limited.

And with both the ATO and Melbourne Water prepared to commit to new buildings if necessary, there was also the potential to boost both construction and supply of new sustainable technologies.

lblundell@thefifthestate.com.au