Refresh at former Macquarie HQ gives new life to Barangaroo
A run of high-profile leasing deals in Sydney’s Barangaroo is restoring confidence in a waterfront precinct that’s been battered by the exit of a number blue-chip corporate tenants.
Those deals were struck by ASX-listed landlord and fund manager Charter Hall recently and cover about 13,500 square metres in a prominent Barangaroo office complex.
Advertising giant WPP and listed financial services software company Iress are set to take 10,000 square metres and 3500 squares metres, respectively, at the premium campus-style office at 1 Shelley Street, leaving only half of the building without tenants.
The 11-storey building became fully vacant in September after Macquarie Group moved into its new shiny headquarters on top of the Martin Place metro station, leaving Charter Hall with about 30,000 square metres to fill.
WPP will consolidate its office requirements, downsizing from three Sydney offices that span roughly 17,000 square metres to just one office. Iress will also downsize its office needs slightly from about 5400 square metres.
The leasing deals are welcome news in the Barangaroo precinct after two tough years. Big tenants such as Macquarie, Westpac and Gilbert + Tobin have either not renewed their leases or reduced their footprints.
The new arrivals for Shelley Street will boost Barangaroo’s leasing momentum that began earlier this year when KPMG, PwC and Accenture renewed large leases at Lendlease’s International Towers and International House.
Office leasing specialist Cadigal director Mark Tindale, who brokered the leases, said the deals showed that Barangaroo was more aligned as a precinct with Sydney’s CBD core – due to its proximity to the Wynyard train station – rather than the broader western corridor precinct that surrounds it.
“Being a neighbourhood of prime assets, strong retail and lifestyle amenity and offering immediate access to Wynyard via the Wynyard Walk, this precinct is the clear outperformer in the western CBD office marketplace,” he said.
But Mr Tindale said only CBD offices that provided high-quality spaces would get filled, with tenants seeking strong environmental ratings, business lounges with variable meeting spaces, event spaces, wellness facilities and sporting facilities.
“Be under no illusion, we are within a cost-conscious economy where value must be proven in order for tenants to receive approvals to relocate their premises,” he said.
“Tenants are demanding high-quality spaces, services and facilities as a given – but are increasingly influenced by ‘what else’ can be provided to their staff.”
Before welcoming WPP and Iress into 1 Shelley Street, Charter Hall invested heavily in refurbishing the property to attract tenants.
The listed property giant spent more than $20 million on the refresh, which will transform 1 Shelley Street into a fully electric building over the next two years. Other changes include adding more retail to the ground floor while also upgrading the entrance to cater to a number of tenants rather than just one.
“I think for well-located assets that actually have lots of amenity to them and strong environmental ratings we are seeing a steady amount of leasing activity,” Charter Hall office chief executive Carmel Hourigan said.
“The Shelley Street precinct is good evidence that it’s not easy in the western corridor of the Sydney CBD by any stretch. However, we are pleased with the progress we’re making on Shelley Street, considering we got this space back in September this year,” she said.
Ms Hourigan said the rest of 1 Shelley Street was expected to be leased in the next 12 months.
Charter Hall is also set to welcome Endeavour Group, the operator of Dan Murphy’s and BWS liquor shops, into 10 Shelley Street which is located next door to 1 Shelley Street. The listed retail drink operator will take over the office currently occupied by Iress.
