Leading Australian software company Atlassian has taken about 5500 square metres of new office space in the Sydney CBD, but has not given up on its dream of creating an urban technology campus.
Nasdaq-listed Atlassian, founded by BRW richlisters Mike Cannon-Brookes and Scott Farquhar, has struck a five-year lease over multiple floors at superannuation-backed fund manager ISPT's 363 George Street tower.
The move, which was foreshadowed by the Australian Financial Review in September, includes space in the adjoining 345 George Street and 24 York Street buildings.
Global head of real estate Brent Harman said Atlassian was "really happy with the deal" but would continue its conversation with the NSW government and the broader technology community about the importance of creating an inner city hub that is the "beating heart of the tech industry in Sydney".
Atlassian lobbied hard to keep the Australian Technology Park in Redfern as a technology hub last year, but lost to a consortium bid led by Mirvac and the Commonwealth Bank of Australia.
"This leasing deal enables us to have an honest and open discussion with the technology community about finding a real home," Mr Harman said.
"The suburban tech campus is dead. The new generation want to work, live, play and learn in the same place. We want to create an urban campus and get the densification you get in places like San Francisco and Silicon Valley."
With the Sydney office vacancy rate at 5.6 per cent and just 4 per cent for A-grade office space, Mr Harman said it was getting harder to find suitable office accommodation in a "landlord friendly market".
"I don't see us being priced out of the market, but for smaller tenants that are growing fast it's extremely difficult to find office space and it's going to get worse." he said.
"I would not like to be looking for big chunks of space now as it's getting extremely competitive."
The commercial terms of the lease agreement between ISPT and Atlassian have not been disclosed.
A new report by Cushman & Wakefield said prime office rents in Sydney had grown to nearly $900 per square metre with JLL reporting that rents were up 15 per cent over the past 12 months to October.
Knight Frank's latest Global Cities report ranked Sydney No.1 worldwide for forecast prime office building rental growth over the next four years.
