16 May 2014 — Investa Office Fund will demolish its B grade 151 Clarence Street building in Sydney to make way for a $110 million A grade building, with Arup committing to four floors – and providing engineering services to the project.
The current 12-storey, 16,000 square metre building, home to Westpac and Telstra, will be demolished in March 2016 to make room for the new 17-storey, 22,000 sq m building, which is targeting 5 Star Green Star and NABERS Energy ratings.
The existing building has undergone two major refurbishments in the past 15 years, and last year increased its NABERS Energy rating from 1.5 to 3 stars. Significantly increasing the performance of the existing building further was likely to be unfeasible, with Investa saying the B grade asset was made up of three interconnected buildings that formed an inefficient floor plate with 35 columns and had poor light penetration. In the new building, more efficient 1200-1700 sq m plates would be created.
Mark Tait, general manager, commercial development at Investa, told The Fifth Estate: “The existing structure does not allow us to develop an unencumbered, A grade office building with industry best sustainability – specifically, the existing structure isn’t capable of taking the additional load of the new floors at the top of the building, and the low floor-to-floor heights do not allow for the high performing mechanical system options we would like to pursue. In addition, the cost of a fully refurbished scheme versus a redevelopment were comparable.”
Arup has committed to a lease of 10 years, and will occupy 5900 sq m over the first four floors. It has also been engaged to provide full multidisciplinary engineering services.
Speaking to The Fifth Estate, Andrew Pettifer, Sydney office leader for Arup, said the practice had looked at five separate options for its next Sydney offices.
While the Investa project meant a longer timeframe to complete, the unique deal would enable Arup to influence the outcomes of the building, which was important from a branding point of view, as well as provide flexibility over its own office space.
“Obviously we were looking for a price point and also the ability to influence what the building would be rather just move in somewhere,” Mr Pettifer said.
“So while it’s a bit of a longer burn to get there this allowed us to deal with Investa, whereby they appointed us multidisciplinary engineer and for us to design a fitout that suits our needs. It allows us a lot more influence.
“They invited us to provide a fee proposal so whether we moved in or not, we put forward a normal commercial fee, but if we took the building then we wanted the job.”
The building also had to be affordable, so A grade rents rather than Premium were also attractive.
However, Investa Office Fund manager Toby Phelps told The Australian rents would “not be far off double” the current building rents.
Investa is targeting a yield of 7.5-8 per cent, and growth in net tangible asset value of 15-20 per cent.
Detailed design work is still to come.
— with Tina Perinotto