Tower One | Race to the top
As commercial vacancy rates in Sydney’s CBD continue to fall, and demand for quality workspace sees no sign of abating, the race is on for organisations wanting to take a long term stake in their future.
A recent Global Corporate Real Estate Survey conducted by JLL reported that 76% of corporate property professionals had a high expectation from their leadership to enhance the workplace experience over the next three years, with 51% of respondents citing growing pressure from the C-suite to drive corporate sustainability.
Increasingly, business leaders are understanding that in order to realise ambitious productivity and sustainability goals, they need a real estate solution that genuinely supports, and preferably helps drive their ideals.
The key issue is that there is a significant under-supply of such real estate in the Sydney CBD, with premium space in premium precincts becoming hotly contested by innovative organisations. “Companies are becoming acutely aware that the Sydney office market is tightening,” says Andrew Ballantyne, National Director, Head of Strategic Research – Australia, JLL. “Increasingly, tenants are seeking to make long-term real estate decisions to ensure their real estate requirements are satisfied for the next 7-10 years.” JLL projects the vacancy rate in the Sydney CBD will compress through 2018 and 2019.
One of the drivers of leasing activity is companies seeking to evolve their organisational culture. Real estate is a visual element of corporate culture and the implementation of an innovative fit-out that supports modern activity-based working practices and sustainability goals, can assist with collaboration, innovation and teamwork. Increased demand for well-located real estate with strong sustainability credentials will result in vacancy being cascaded down to lower quality assets.
JLL also estimates that almost 47% of Sydney’s office stock is in excess of 30 years old. The ability for older buildings to be ‘retro-fitted’ to allow for modern work practices can be difficult and costly. In addition, the advances in building technology, even over the past five to ten years, means that towers constructed only a decade ago are now well-behind the latest thinking in sustainability and flexibility.
Perhaps the ultimate example of the modern work place is Tower One, International Towers Sydney, officially Australia’s largest office building and the most sustainable high rise commercial tower in the country. Along with the adjoining towers that make International Towers Sydney, Barangaroo is Australia’s most sustainable business precinct.
“Apart from being the most sustainable commercial precinct in the country,” says Natalie Slessor, Head of Workplace, Lendlease, “International Towers Sydney will also be one of the largest flexible workplaces of its kind in the world. Almost every tenant of the towers so far has used the opportunity of moving to Barangaroo as a chance to re-think their work practices and adopt more efficient, more productive and more agile environments and systems.”
In the discussion of real estate, it’s not just floor space that contributes to a better workplace experience. “When people ask me what the next big thing in workplace is,” continues Natalie Slessor, “I say it’s the place itself. The importance of an engaging, sustainable, dynamic precinct can no longer be underestimated. Access to high quality amenity, which isn’t just about great coffee and food but also caters to fitness and health, can have a profoundly positive impact on the wellbeing and satisfaction of workers, and therefore their engagement with their organisation. And better engagement means better performance outcomes.”
As Tower One International Towers Sydney nears completion, organisations including Servcorp, PwC, Marsh & McLennan Companies and HSBC have been amongst the first to secure long term leases. With the availability of comparable space in Sydney significantly limited, it’s likely the remaining space will be in very high demand from a long list of companies wanting to be the best they can be, in the best building in town.
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