DEXUS Property Group has taken occupancy at one of its key Melbourne towers, 385 Bourke Street, to 98 per cent after leasing more than 20,000 square metres of office space during the past 12 months.
The successful leasing campaign has been driven by subdividing some of the vacant floors to cater for demand from smaller businesses and upgrading and refurbishing the tower, including launching DEXUS Place, the first Melbourne offering of its flexible meeting, training, conference and event facility.
About 15,000sq m of office space became vacant last year after the departure of the Commonwealth Bank from the whole of the low-rise component of the building, followed by a further 6000sq m when other tenants departed.
In the latest deals, design firm Architectus and software provider SAS have struck eight-year terms at 385 Bourke Street. Architectus has leased 980sq m on Level 25 and SAS will occupy the whole of Level 22.
Other recent deals range in size from just 172sq m leased by specialist banking recruiter Profusion Group, to 522sq m leased by Chinese telco Huawei, both for five years.
The rents were not disclosed but it's understood net rents ranged from $485 to $495 per square metre on the lower levels and from $500 to $520 per sq m on the higher floors with incentives between 25 and 30 per cent.
The 12-month leasing campaign was run by Adam Davy, Milly Stockdale, Andrew Beasley and Tony Landrigan from Colliers International.
Mr Davy said office rents were starting to rise due to a lack of supply of good quality, A-grade office space with incentives starting to pull back. "Most tenants are taking incentives in the former of rent abatement in exchange for longer lease terms."
DEXUS acquired the 41-level, A-grade tower and retail mall on the corner of Bourke and Elizabeth streets in 2014 as part of its acquisition of the Commonwealth Property Office Fund (in partnership with the Canada Pension Plan Investment Board).
