Corporates such as TAL Insurance, Russell Kennedy Lawyers, Holding Redlich, PKF, and the Victorian Legal Services Board are happily ensconced in ISPT’s retrofitted building at 500 Bourke Street Melbourne. For TAL it’s a third time tenancy. So what’s the big attraction?
Australian fund manager ISPT, which owns a $21.5 billion portfolio of 140 commercial, retail, industrial and residential properties nationwide, is taking a leadership role on sustainability with recycling of existing buildings (and fitout) featuring high on its priorities.
A premium example is the refurbishment of the company’s commercial tower at 500 Bourke Street in Melbourne’s CBD, which was completed in December 2023. As well as improving environmental performance, the project aimed to create a space where corporates and their employees would not just show up to the office, which is a challenge for many in post-COVID times, but might actually love coming into work.
The Fifth Estate sat down with head of ISPT’s office portfolio, Nicole Ward, to find out more.
500 Bourke Street: Some background
This 36-storey commercial high-rise was originally built in 1978, and ISPT has owned it since 1998. National Australia Bank occupied the building for most of its life up until 2021, with a branch on the ground floor and offices taking up the remainder of around 44,000 square metres of floor space.
In 2021 NAB moved into another ISPT building down the road, taking its personal items, business equipment and some of the fittings. They left everything else behind in the vacant building, including much of the fitout and 15,000 pieces of unwanted furniture.
Ward and her staff were tasked with working out what to do with the building. “As a responsible landlord, we looked at it with an environmental, social and governance (ESG) lens,” she says.
“Given the structure was very sound and it still provided the type of … accommodation that we know office tenants in this market are looking for, we figured the most sustainable building is one that’s already built.”
Aiming for the highest possible ratings
Ward knew that the floor area of each level, at around 1300 sq m, would be attractive to prospective tenants in this financial and legal precinct. These types of clients also generally want open plan or perimeter CBD offices with good access to natural light and views, which the existing building could provide.
The company engaged a formidable team to design and complete the project, including architecture firm Fender Katsalidis, construction company Roberts Co, and Aurecon for its technical, engineering and sustainability expertise.
In brief the refurbishment included:
- retaining the original structure
- striping out everything that was internal, including ceilings, carpets, services and fittings
- redoing the entire building with new internal fittings
- removing gas and converting the building to 100 per cent electric, to be powered with renewable energy
“So it’s net zero from day one, which we’re very proud of,” says Ward. The project saved about 57,000 tonnes of embodied carbon simply by retaining the existing structure – the equivalent of around 9000 cars on the road every year.
The refurbished building attained a design rating of six stars in the Green Building Council of Australia’s Green Star rating system for healthy and sustainable buildings. This represents “world leadership” and is the highest possible rating.
The NABERS system for energy and building efficiency can only be applied 12 months after 75 per cent occupancy is achieved, and ISPT will be aiming for a rating of at least five and a half stars (with the highest being six) when the time comes.
The refurbishment option also fitted in well with ISPT’s climate change emission policies, which include having achieved carbon neutrality across its portfolio in 2020, and the goal of becoming carbon positive by 2025.
A massive recycling job with the fitout left behind by NAB
Another aspect was partnering with Sustainable Office Solutions (SOS) to repurpose and recycle the furniture and fittings left behind by NAB. This included blinds, ceiling and carpet tiles, white goods, and the massive amount of furniture. SOS managed to divert 85 per cent away from landfill, which was “a huge exercise to do, but one that we felt strongly about,” says Ward.
In addition, by selling off furniture and other items, together with a contribution from Roberts Co, the company was able to donate $250,000 to the Property Industry Foundation towards building homes for at-risk youth. Plenty of good feels here.
And the cost was …?
ISPT’s total investment was around $160 million. Construction and fitout estimates indicate that this is about half of the cost of demolishing and building from scratch, including an estimated $4.4 m for demolition ($100 a sq m), $240 m for construction ($5390 a sq m) and $66 m for fitout ($1500 a sq m), totalling about $310 m.
Four big strategies to attract tenants
In order to attract quality, long-term tenants into the completed building, ISPT is focusing on four main strategies.
The first is to make the rents competitive. According to Ward they range from the low $600s a sq m on the lower floors to high $700s on the upper levels. This compares favourably to rents of between $800 to $1000 a sq m for recently developed new buildings in the CBD.
The second is demonstrating that, although the building isn’t new, tenants will be coming into a high end, A-grade building. This involves marketing the updated, contemporary interior and services, as well as a demonstration suite that gives people a feel for the fitout and ambience of the building.
ISPT is putting into place several initiatives aimed at enticing Melbourne’s ugg boot wearing, pyjama-clad post-lockdown workforce back to the office.
The third is focusing on the ESG aspects, which “really resonate with corporate groups,” Ward says. “They have their own values, goals and targets to hit. Often when we are chatting to them, the fact that ISPT has goals and targets that are aligned with their own provides them with a lot of comfort.”
The fourth is amenities, including excellent food and drink options in the canteen, ground floor restaurants and cafes. The building also includes ISPT’s “Flex” initiative. This provides communal business lounges and fully equipped spaces that many companies need only occasionally, such as boardrooms and auditoriums, which can be booked and paid for per use.
Bringing employees back to the office
ISPT is also putting into place several initiatives aimed at enticing Melbourne’s ugg boot wearing, pyjama-clad post-lockdown workforce back to the office.
“We are trying to do more than just muffins or sausage rolls … because everyone resonates with something a little bit differently,” Ward says. This includes:
- bringing experts on different topics to run regular thought leadership sessions
- running subsidised school holiday programs inside the building for children of employees
- celebrating different cultural and religious festivals throughout the year
These types of programs are attractive to employers aiming to keep their workers happy. They also build social sustainability, which is all about doing business “in ways that benefit society and protect people.”
Building employee buy-in for ESG aspects
Once 500 Bourke Street is fully tenanted, ISPT will run environmental education sessions to encourage employees to engage with the various sustainability aspects of the building, as it does in other projects. Topics will include waste, recycling, water and energy efficiency.
As well as building awareness, enthusiasm and community around ESG issues, this educational aspect is vital for maximising sustainability performance.
Tenants are flocking
Numerous companies, both big and small, have already moved in or signed onto tenancies in the building.
These include legal, financial services and insurance companies such as TAL Insurance, Russell Kennedy Lawyers, Holding Redlich, PKF, the Victorian Legal Services Board and Wotton + Kearney. Most are still completing fitouts, but if all goes to plan it will become a busy, functioning precinct by the middle of this year.
Some tenants are repeat customers, such as TAL Insurance, which already occupies ISPT buildings in Sydney and Brisbane.
An important contribution to ESG, net zero and social sustainability
The uptake of tenants is testament to the success of all aspects of ISPT’s approach, including the ESG initiatives, Ward says.
With Australian buildings accounting for 18 per cent of the nation’s direct carbon emissions, the commitment of companies like ISPT to achieving net zero well before 2050 (plus its aim to become carbon positive), is critical.
Ward believes that, in addition to its sustainability and social initiatives, 500 Bourke St simply has a lot to offer.
“I’d like to say we’re an amazing landlord, which I think we are, and I genuinely think we have a very good portfolio in terms of quality of buildings. We also activate and bring in amenity to our projects,” she says.
“We know an office is more than just the four walls.”
– From an interview by Tina Perinotto