The Sydney CBD embracing a new trend with its office space, as companies are looking for space that’s got a special touch to it, in order to stand out from the rest.
Heritage property owners in the Sydney CBD are in a good place, currently, as office tenants have been looking to put their commercial fitouts in Sydney into properties with a creative point of difference. However, there are a lot of new buildings currently under development, including the possible 45,000m2 office tower at Circular Quay by Mirvac, a project which will cost an estimated $1 billion.
In order to meet the demand in the district, the owners of heritage buildings have made their properties undergo makeovers and refurbishment, with the side objective of also allowing for higher rents, if possible, according to Colliers International.
Within recent months, heritage properties across the district have been switching hands, with the total value sitting somewhere around $100 million, with a ratio of about $16,933-$17,969 per m2 per annum.
Traditionally,it’s rare to see commercial fitouts in Sydney in heritage buildings, as these properties in the outskirts of the city are bought by more creative industries, individuals and organizations, like architects, due in part to the CBD-based locations are under lease by the departments of the government, and their interiors aren’t updated.
The trend of snapping up heritage properties by companies started thanks to the arrival of businesses in the tech sector as well as the rise of shared office businesses, who are looking for buildings with character and personality and are located in the centre of the CBD.
Director of Office Leasing for Colliers International, Thomas Fredriksen, says that refurbished heritage buildings appeal towards marketing, advertising and creative firms. Thanks to the rarity of these buildings, supply is not meeting demand, resulting in tenants willing to pay higher rent rates in order to secure space in these properties.
According to Collier’s Associate Director of Investment Services, Jordan Lee, says that 90% of the investment sales over the recent 2 years for properties under $50 million in the CBD have been for heritage buildings. Lee says that buyers recognise that high quality heritage space is at a premium, and, as a result, rental growth is pretty much expected.