The foyer of Building C, at Mascot. Photo: Supplied

Qantas puts two buildings at its Sydney headquarters up for lease as part of cost-cutting

Sue Williams|Sep 17, 2020

Qantas has put two buildings at its headquarters near Sydney Airport up for lease as a result of an economy drive to cut overheads.

The standalone commercial buildings in Mascot – with between 2200 square metres and 20,000 square metres of corporate space, fitted out and furnished with open-plan workstations, offices, breakout areas and meeting rooms – are being offered for immediate occupation as part of a sublease.

It’s estimated that both buildings fully leased would save about $10 million a year in leasing costs for the carrier.

Other smaller offices in the Melbourne CBD and Hobart are also being earmarked for subleasing.

qantasHQ — One of the Qantas buildings at Mascot that is available for lease. Photo: Supplied

The move follows the start of the Qantas Group’s three-month nationwide review of its rented spaces, with plans to consolidate outgoings as a result of the severe impact on business of the COVID-19 pandemic, and position it with more cost-efficiencies for the future.

“Like most airlines, the ongoing impact of COVID means we’ll be a much smaller company for a while,” said chief financial officer for the Qantas Group Vanessa Hudson.

“We’re looking right across the organisation for efficiencies, including our $40 million annual spend on leased office space.

“As well as simply rightsizing the amount of space we have, there are opportunities to consolidate some facilities and unlock economies of scale. For instance, we could co-locate the Qantas and Jetstar head offices in a single place rather than splitting them across Sydney and Melbourne.”

Other buildings are also expected to come up for sublease as the review continues, but the Mascot buildings, Buildings C and D at 10 Bourke Road, are the first to be made available.

They’re likely to be in strong demand, being only 270 metres to the nearest train station, close to the airport, and with plenty of shops nearby.

Colliers International’s Jackson Wray is one of the agents hired to lease out the space, but is staying tight-lipped about the terms of the leases without the permission of Qantas.

“We won’t be giving out any details without hearing from them first,” he said.

One of the two buildings owned by Cromwell Property Group has 14,690 square metres of space across six levels, which can be leased separately. The other has 5036 square metres over two levels which can only be leased as one lot.

Both have a 5.5 NABERS energy rating, and plenty of on-site car parking.

But records show there is 12 years remaining on the lease, and the rent for the properties is more than $500 a square metre. This would mean savings for the carrier of roughly $10 million a year in rental costs if both buildings were fully subleased.

The move comes as Qantas licks its wounds following its posting of a $1.9 billion statutory after-tax loss in the 2020 financial year, down 333.8 per cent on the prior corresponding period. The loss was due mostly to the pandemic, with a $1.4 billion depreciation of its assets and the $642 million cost of redundancies and restructuring.

The airline stresses that it has no intention of relocating any of its functions offshore as a result of the review. But it is looking for a possible opportunity to bring many of their aviation facilities – like flight simulator centres in Sydney and Melbourne, and the heavy maintenance facilities in Brisbane – together on one site.

A slimmed-down Sydney HQ is one of the options being considered, or possibly re-siting everything on one all-purpose “campus”.

Qantas is now inviting state governments to provide incentives to lure the business to their states, and is also looking closely at the potential of the greenfield sites around the new Western Sydney Airport.

“Most of our activities and facilities are anchored to the airports we fly to, but anything that can reasonably move without impacting our operations or customers is on the table as part of this review,” said Ms Hudson. “We’ll also be making the new Western Sydney Airport part of our thinking, given the opportunity this greenfield project represents.

“The Qantas Group will remain one of the country’s largest employers and a major generator of economic activity, so we’re keen to engage with state governments on any potential incentives as part of our decision-making.”