Trend – commercial office blocks to residential
Take a moment to look around the city areas of Australia, what is happening to the office towers?
We all want to live near the action…
The overall population in Australia as we know is concentrated along the coastal areas of each state, with a heavy concentration of this population in Sydney and Melbourne. Forecasts for the future in Sydney alone indicate there will be an increase of 47% by 2031 (refer PropertyOz 17 March 2014) and this is indicated to require an additional 45,000 new dwellings. These are the areas driving the trend in the conversion of commercial offices to residential inner city style living.
If you have read any press of late, the landlords are all getting on board with the conversion of commercial office space to residential. As sites and space are at a premium for residential the next best option is for conversion. A combination of low interest rates for home buyers and perhaps landlords not getting the return on the commercial space, the appeal of conversion represents new revenue opportunities.
The next three years will see plenty of activity in the conversion of these sites in the CBD areas and interest from off shore developers is increasing.
What is next?
The next three years will see plenty of activity in the conversion of these sites in the CBD areas and interest from off shore developers is increasing. With tenants leases expiring and landlords indicating renewals may not be possible, the opportunity for conversion is set to become a reality.
Views and Location Location Location
Think of the view from the Coca Cola building on Sydney’s Circular Quay foreshore. This is one sight that plans have been lodged with the City of Sydney for a variety of high end residential apartments. 50 Bridge Street is in the planning approval stages for a major revamp of the commercial towers with plans proposing to convert the aging site into mixed use premium office space and residential apartments and retail, to optimise the location flowing into Circular Quay.
(Source AFR 21 March 2014)
What if I am a Tenant in one of these buildings?
As an active tenant rep in the market, we have been hearing these re-development stories for some time now and negotiated for tenants in a variety of the buildings that have been “ear-marked” for conversion. There are pro’s and con’s for each tenant impacted by these decisions. Keep in mind these decisions are often made years from implementation and your commercial lease should cover these scenarios.
Confused, Worried or Need More Information?
If you are seeking more information and would like some certainty relating to your office space, TRS offer an independent service to tenants, we do not represent landlords or property companies.