DeGroup to go ahead with $70m office tower in Melbourne CBD
While the anticipated trend might be a post-pandemic pivot away from office to residential projects, one Melbourne developer is sticking to their original intentions.
Developer DeGroup will embark on their new $70 million office tower in Melbourne’s CBD despite concerns over rising vacancy rates.
Founder Colin DeLutis said the group was more than confident that the new building would find a ready leasing market.
Located at 263 William Street, in the heart of Melbourne’s legal precinct, the project is set to rise 75 metres above the Metropolitan Hotel which will be retained with a suite of restoration works.
"With nothing new and modern having been built in the legal precinct for over 20 years, we are quite bullish about the market and very confident about the building’s leasing potential”, DeLutis said.
The company’s confidence diverges from commentary by property experts who have expected a lessening of demand for commercial developments in the Melbourne CBD.
“We’re going to see CBD office buildings converted into residential,” Kernel Property’s Steve Urwin said in July.
This has been supported by recent national office statistics for Q3, released by JLL.
“The extended lockdown in Melbourne has negatively impacted the leasing market with the availability of backfill space and sublease space contributing to the uplift in vacancy”, said JLL’s head of leasing Tim O’Connor.
According to JLL’s insights, the Melbourne CBD recorded -70,100 sqm of net absorption over the quarter and vacancy increased to 11.3 per cent in 3Q20.
The presumed push away from offices has yet to influence some Melbourne’s commercial developers who are confident that businesses and their clients want COVID safe, hygienic spaces.
The 20-storey, 7,013sqm building, offers 3,799sqm of office space over 17 levels and features an 822sqm multi-level restaurant and bar.
The self-contained office floors will feature kitchenettes, shower facilities, natural light from all sides and views of Flagstaff Gardens and the surrounding CBD.
Crema Constructions have been appointed as builders of the WMK Architecture designed building.
The tower is due for completion in 2022.