Lendlease, Mirvac and Hemmes in box seat for Sydney Metro project
Property giants Lendlease, Mirvac and their partner, hospitality king Justin Hemmes, are in the box seat to win one of Sydney’s most highly sought CBD developments after rival Brookfield pulled out of the race for the Hunter Street metro station project.
At stake in the project are the two towers, each of 50 storeys or more, which could deliver 150,000 square metres of commercial office space, potentially worth billions of dollars when developed.
Adding to the development’s value is its location in the heart of the CBD and its links to the Sydney Metro West services and, via underground walkways, to Martin Place and Barangaroo.
“The Brookfield Consortium has informed Sydney Metro they no longer wish to participate in the Hunter Street Precinct Development Partner process (PDP),” A Sydney Metro spokesperson said in response to a query from The Australian Financial Review on Monday.
“Metropolis Consortium remains as the sole tenderer for the Hunter Street PDP process.
“While only one tenderer remains, Sydney Metro will continue with the current tender process, assessing the Metropolis Consortium’s proposal in line with government objectives to ensure it meets all requirements and delivers value for money.”
Three years ago, the NSW government short-listed the two groups to tender for the delivery of the landmark station and two buildings above. The Metropolis consortium includes developers Lendlease and Mirvac, along with Hemmes’ private companies and the Coombes Property Group, while the Brookfield consortium ropes in several arms of the Canadian property powerhouse.
The Hunter Street station will have two entrances: one on the corner with O’Connell Street and the other on a corner with George Street. A decision on the winning consortium had been expected by last year.
However, by February this year, according to industry sources, Brookfield had already indicated it would withdraw from the process to focus on more immediate opportunities as it directed its investment into logistics, student accommodation and hospitality.
For its bid, the Brookfield consortium would have brought to bear its experience in over-station development nearby, transforming the precinct around Wynyard Station with a $2 billion office tower after pursuing an unsolicited proposal with the state government.
While the Metropolis consortium’s appointment to the project is by no means assured, it augurs well for the group just as the CBD runs into a dearth of new office supply. That lack of space, coupled with a broader push to return to the office, has triggered a race for quality accommodation among blue-chip tenants in the city’s top towers.
It coincides as well with a dramatic revamp at Lendlease, led by Tony Lombardo, to reduce the property giant’s exposure to offshore markets to funnel capital back into its Australian business. That includes its investment management arm, which last month won a $1.2 billion mandate from South Korea’s National Pension Service to look after Aurora Place, a Sydney office tower. Lendlease is also developing above the Victoria Cross station in North Sydney.
The increasing interest by top-flight tenants and investors in Sydney CBD towers is apparent in Mirvac’s recent success with its 55-storey development at 55 Pitt Street, where around a dozen law firms have pre-committed to space and a major Japanese investor has agreed to buy a two-thirds stake in that project for around $1.3 billion.
