This was published 7 years ago
WeWork takes second space in Melbourne CBD
By Nicole Lindsay
US co-working juggernaut WeWork is poised to take space in the London Stores building in the Bourke Street Mall as its second office location in Melbourne.
The 5000 square metres of office space overlooks the busy shopping thoroughfare, on the corner of Elizabeth and Bourke streets, in the heart of the city.
Co-working business WeWork is set to lease space in the London Stores building in the Bourke Street Mall. Credit: Eddie Jim
The deal will wrap up one of a number of leasing mandates in the Melbourne market, the biggest of which is banking giant NAB's 50,000 sq m requirement.
Pundits suggest NAB is looking at Brookfield Property Partners $800 million tower at 405 Bourke Street or a move out of its traditional territory to Charter Hall's Wesley Church tower at 170 Lonsdale Street.
The office space in Bourke Street Mall will become WeWork's second co-working location in the Melbourne CBD. Credit: Joseph Feil
"But all of NAB's other locations are on Bourke Street and they have already done a deal in Sydney with Brookfield at Wynyard Place," said one market player.
Energy Australia's shortlist is understood to contain Lendlease's Melbourne Quarter, 222 Exhibition Street and 2 Southbank Boulevard at Freshwater Place, recently vacated by PwC.
However, ongoing debate about energy regulation is understood to have stalled the search for new 20,000 sq m digs.
Recent research by Savills shows the volume of office space leased more than doubled in 2016 to 569,810 sq m – up 128 per cent on the 2015 figures. Net absorption last year was 117,000 sq m, well up on the the 86,000 sq m averaged during the past 10 years.
Technology companies Fujitsu and Seek are also understood to be in the market for new offices, with the former keen on Mirvac's development at 664 Collins Street, next to Southern Cross railway station.
Media agency Dentsu Aegis Network is considering Cremorne and South Melbourne, as well as the CBD for its 20,000 sq m space requirement.
Market sources suggest recruitment firm, Seek, which occupies most of an 8000 sq m building at 541 St Kilda Road, has two locations in the Cremorne "creatives" precinct on its shortlist.
Seek's move into Cremorne would cement the area's growing reputation as a technology hub. MYOB and Uber already have space in the area which is dominated by small creative firms and a slew of large retailers in the business park alongside the Yarra River.
Cremorne is also popular for co-working spaces which attract workers and small businesses in the creative industries. But the US-based WeWork has eschewed that area, pitching its new spaces straight into the heart of the CBD.
WeWork has already leased 6000 sq m of space at 401 Collins Street – nearly the entire building – which is owned by the Liberman family-backed Impact Investment Group, which bought the 11-storey building from pollster Gary Morgan in 2014.
London Stores, built in 1925, is owned by the Alter family, whose Pacific Centres owns and runs suburban shopping centres in Epping and Werribee.
The 10-storey building was bought in 1982 for only $9 million. It has substantial retail space in the bottom three floors, including the basement leased to Cotton On, Amart Sports and Optus, paying rents of around $10,000 a sq m.
The office space above the shopping area has been leased in the past to education groups but has been recently refurbished. The company declined to comment on the WeWork deal.
The co-working office space sector grew at 960 per cent over the past three years, according to research from Knight Frank.
There are 170 co-working locations in Melbourne covering 65,537 sq m. In 2016, 24 new spaces opened adding 17,078 sq m to the total.