This month’s commercial update highlights some key projects shaping Australia’s major capitals. From Sydney’s new metro to Perth’s industrial growth and Darwin’s data centre expansion, government projects, sustainability efforts, and key infrastructure upgrades are driving activity across the country.
Sydney
The long-awaited opening of the Sydney Metro has sparked Monday morning conversations, “Have you tried it yet?” Whether it is enough to seriously impact the number of people commuting to the office remains to be seen, but the positive impact of world-class transport on major office developments (new and existing) is a tried-and-tested formula.
Measuring the Metro will take some time, but London’s Battersea extension brought Apple’s 50,000 sqm UK HQ to an old power station, while the Grand Paris Express has already triggered over 100 real estate projects adjacent to new stations.
Brisbane
Investors seeking value continue to dip into the Brisbane commercial market. Sentinel recently acquired the RACQ House on 60 Edward Street at what is claimed to be around 50% of the replacement cost. In a state with significant public sector capital investment in ongoing projects (Cross River Rail) and future projects (Olympics 2032), we can expect further strategic investments from both existing and new market players.
A recent example is Dexus and Marquette Properties’ plan to convert 41 George Street from an office tower into a 1,200-bed purpose-built student accommodation development by 2026.
Perth
Western Australia’s industrial property sector has been the strongest market segment in recent years, with median values in Greater Perth steadily rising since 2020, now reaching $2,389 per square meter. The WA Government's “Diversify WA Strategy” highlights sectors of high importance to the state, like biomedical and life sciences.
This focus is demonstrated by the recent memorandum of understanding (MOU) signed between the CSIRO, the WA Government, and the University of Western Australia, aimed at exploring and activating a new biomedical industry precinct at the CSIRO’s Floreat site.
Melbourne
Melbourne’s office market continues to generate mostly negative headlines, with vacancy rates surpassing 20% earlier this year and future indicators pointing to low tenant demand and excessive supply, further challenging market confidence. A recent example of V-Leader’s decision to shelve plans for a number of significant office developments in both the CBD and Fringe markets, including a 24,00 sqm tower at 600 Lonsdale Street, does nothing to improve sentiment. The loss of viability of these projects was blamed squarely on low tenant demand and increased construction costs.
Adelaide
While Charter Hall and Walker have dominated headlines for new office developments in recent years, the South Australian Government is now getting in on the act with an expression of interest (EOI) for a development partner for its 17,000 sqm Innovation Centre at the city’s Lot Fourteen. The centre will accommodate state and federal government tenants and key defence tenancies and is expected to be completed by Q4 2027. Notably, 77% of the precinct is already pre-committed on 10-year lease terms. With a 100% leasehold interest available on a 99-year ground lease and exclusive rights for future district development, the EOI should generate plenty of interest.
Government initiatives remain a key driver of activity in the Adelaide market. The ATO also issued a requirement for 19,000 sqm of new office space to be delivered before the end of 2027.
Darwin
Last month, Next DC opened its new D1 Data Centre in Darwin’s CBD. It features 1,000 racks and provides secure data storage with both domestic and subsea cable connectivity for Australian and international clients.
As Australia’s data centre market is expected to double to $40 billion over the next four years, Darwin is well positioned to benefit from further investment, especially as a key subsea cable landing location for the APAC region.
Hobart
Work has begun on upgrades to Hobart International Airport, aimed at expanding its accessibility across APAC. The work will open Hobart to long-haul aircraft such as the Boeing 767 and Airbus A350, improving freight opportunities for Tasmania’s agriculture industry.
Canberra
Finally, to the nation’s capital, where Capital Property Group, owners of Canberra Airport, have announced a 65,000 sqm commercial development in Civic. Sustainability is at the core of the project, and the fully electric development is set to start construction in November 2024. It aims to meet the continually high bar on sustainability measures required by key government tenants in the ACT.