Sydney, 8 July 2013 – It wasn’t so long ago that developers and investors ran for the hills at the mention of the word “heritage”, but today the reverse is occurring.
A new review by CBRE highlights how best practice examples of heritage conversions are helping to create value, and in some cases better financial outcomes, compared with modern office assets.
CBRE Capital Markets Director Gavin Lloyd said a significant proportion of the occupier market were seeking creative and interesting work space environments which enhanced their corporate culture and could lead to attracting and retaining top talent employees.
“This is an important evolution as it is now financially rewarding to preserve our heritage architecture and culture,” Mr Lloyd said.
Entire Sydney heritage precincts have been refurbished by developers, among then Jones Bay Wharf and Walsh Bay. These heritage wharfs offer a creative work environment blending heritage features with state-of-the-art modern tenancy fit outs.
At the refurbished heritage finger wharf Pier 8 & 9, Walsh Bay, Hassell Architecture has just signed a 10- year lease for 2,660sqm of space which will see it join Yahoo!7 and Murdoch Media.
Design firm Hassell spent more than five years inspecting over 50 properties before selecting its new Sydney home. But it took just four months after the lease was struck on the Walsh Bay property for the firm’s 120-strong team of architects and designers to move in.
The 2,660-square-metre tenancy in the historic building fit with what managing director Robert Backhouse described as Hassell’s “demanding brief”, which sought a quirky, heritage space that allowed staff to work in a studio format, rather than traditional office space, and one that they could be used to showcase their work to clients.
“Some recent lease deals have demonstrated that tenant incentives for creative heritage space can be half that of conventional office stock,” Mr Lloyd said.
Nearby at 36 Hickson Road, a sandstone heritage building which was Sydney’s original gas works and refurbished by Lend Lease is attracting strong buyer interest according to CBRE.
Investors & developers have recognized the commercial advantage of being able to offer space with a point of difference. With strong tenant demand, lower incentives and shorter letting up periods, investor returns can be enhanced significantly.
Demand for heritage space has also led to an intense investor focus on Sydney’s Western Corridor, where many of Sydney’s original heritage warehouses have been converted to funky office space. The precinct is developing into a creative hub attracting architects, designers, advertising, media and software groups.
In some cases tenants have been known to pay more than the asking rent to secure the creative space they desire.
Listed on-line travel company Wotif recently leased 1,350sqm of space in the 1887 built Corn Exchange building in Sussex St.
Wotif chief executive Scott Blume said; “With such a historic and inspirational work place we expect this will help motivate our team as they continue to develop new and exciting initiatives.”
In Sydney’s Western Corridor developers The George Group have just completed the refurbishment of a floor in Reid House, a 1906 King St building adjacent to the Apple store. The federation period 11-storey building is understood to be Australia’s tallest timber structure.
Mr Lloyd said; “The refurbishment has restored the premises and respects the building’s original heritage integrity including floor to ceiling windows, timber floors and pressed metal ceilings, creating a light filled funky office space in the heart of the city.”
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