Demand for high-quality office space in major metropolitan regions is seeing a raft of luxe workplaces cropping up through city suburban hubs. Ranging from well-appointed boutique suites in prime locations to resplendent office blocks appointed with visually stunning atriums, onsite management, theatres and conference rooms, they are drawing solid rents from upscale businesses looking for options outside CBD centres.
Typical of the smaller boutique style are The Bay Suites taking shape about 30km from Sydney’s CBD in the Sutherland Shire, a populous southern fringe region from where city commutes easily take well over an hour. Built not only to offer prestige and proximity, a selection of the 12 state-of-the-art open-plan offices were also designed with the Shire’s many football fans in mind, coming with direct views over the Cronulla Sharks NRL home ground through floor-to-ceiling windows. Other suites overlook the lush greenery of neighbouring Woolooware Golf Club. Along with private kitchenettes, high speed NBN and more, the premium offices effectively double as prestige workspace and entertaining venue for clients and staff with Cronulla Sutherland Leagues Club (Sharkies) next door.
As is typical with this emerging breed of premium office space, The Bay Suites are offered as part of a larger vision, in this case the 10-hectare Woolooware Bay Town Centre. Described as an “integrated masterpiece”, the Aoyuan International and Capital Bluestone development is the Shire’s only waterfront residential community and comes with its own shopping centre, plush fitness facilities and a rooftop pool.
Marketing agents are seeing strong interest for the 33 sqm to 77 sqm commercial suites, saying they fill not so much a gap but a gaping hole for premium workspace close to home. Inquiry is coming from a variety of local businesses such as marketing, interior design and accounting firms to dentists, physiotherapists, construction and surveying companies.
“There is nothing like it in the Sutherland Shire,” said Highland Commercial Property’s Casey Allison. Hayden Bennett from co-marketers Commercial Property Group attributes the lengthy city commute as a major driver of the suites’ popularity as well as their calibre.
“There's a real lack of high-quality commercial office space to service local professionals in the Shire,” Mr Bennett said. “Many are forced to commute to other areas for work. These suites provide the opportunity to work close to home - everything will be there on your doorstep.”
Metro regions have emerged as major markets for office space of all styles in the past few years. The inaugural Jones Lang LaSalle (JLL) report into the sector released in May revealed investors pumped more than $4.6 billion into the sector nationally in the previous 12 months as a consequence of tight supply and spiralling rents in capital city CBDs. The trend is also being driven especially in Sydney and Melbourne by the addition of major new rail and road links as well as individual State governments’ decentralising public sector jobs.
Large scale overseas investment in the sector has followed. One of the most significant transactions was June’s record-breaking $438.2 million purchase of the Zenith Centre office complex in Sydney’s north shore hub of Chatswood, the highest price paid to date across Australia’s metropolitan office market.
This came a few months after the purchase of a three-level office block in Melbourne’s fringe neighbourhood of Canterbury for around $11 million to a first-time Chinese investor.
According to JLL’s research, Melbourne recorded $1.211 billion in metropolitan office sales last year and Sydney more than $2.45 billion. “Metropolitan markets across Sydney and Melbourne are seeing strong leasing activity and above-trend rental growth,” said JLL head of research Andrew Ballantyne.
Melbourne’s fringe area, including its northern end where the Melbourne Metro project will dramatically improve the connectivity, has recorded three successive years (2016-2018) of double-digit prime net effective rental growth, the JLL report found.
In West Australia, the latest CBD research report by Knight Frank released this month (October 2019) has found the beleaguered office market in the metropolitan fringe region of West Perth is showing strong signs of recovery as Perth CBD’s vacancy levels continue to fall – and in line with the nation’s other metropolitan hubs, it is the quality, A-grade buildings leading the way.
West Perth’s Halcyon House at 1 Campbell Street is, for example, currently seeing the strongest levels of leasing activity for several years. New five-year deals with blue chip tenants Auto Repair Group (RAC) and global recruitment firm Atlas Professionals have just been struck, as well as a four-year lease with major rail haulage group WATCO.
Knight Frank Partner and Joint Head of Office Leasing Greg McAlpine put the popularity of Halycon House down to several factors: an ideal location overlooking Harold Boas Gardens, easy access to major roads and proximity to West Perth train station as well as the property’s high level of finishes and security.
“The market is certainly turning and it is buildings like Halcyon House that will be snapped up first followed by other A-grade buildings and quality boutique stock,” Mr McAlpine said.