Australia Post aims high with AUD150m lease
Takeover target Multiplex is poised to execute one of the Melbourne CBD’s largest office pre-leases through a $150 million deal with Australia Post.
Multiplex is expected to sign Australia Post to 42,000sqm of space at its planned Southern Cross West tower, even though the postal authority still hasn’t completely ruled out the option of building its own new national headquarters in Spencer Street or moving to the APN Property Group’s 567 Collins Street.
But with Southern Cross the hot favourite it’s a timely boost for Multiplex, which only last week announced it had received an approach from a so far undisclosed suitor.
Multiplex shares surged on the news last Thurday, rising 17 per cent to AUD4.85, but have since eased to close yesterday at AUD4.45.
Exhibition Street’s existing Southern Cross East office tower, 75 per cent owned by Multiplex and already filled with mostly Victorian Government workers, is one of the group’s largest single assets, with a March 2006 valuation of AUD390 million.
The west tower, to face Bourke Street, is the second office building planned for the development, which is on the site of the once Nauruan Government-owned five-star Southern Cross Hotel.
The 22-level building, expected to have around 45,000sqm of space, has so far cost AUD6 million.
Multiplex remains tight-lipped about its lease negotiations with Australia Post.
However, a Multiplex spokesman said yesterday the group was talking to three or four prospective tenants and expected to start work on the second tower later this year.
Although considerably less than the 108,000sqm pre-lease deal completed last year between Lend Lease and ANZ for a new campus-style office complex for the bank at Docklands, the Southern Cross West tower will set the scene for a run of major pre-lease deals expected during 2007.
Westpac and Commonwealth banks, and possibly NAB, and telcos Optus and Telstra all have space requirements expected to trigger a new round of Melbourne office development.
Australia Post is understood to be ready to pay a rental of around AUD350 a square metre, with a deal reflecting an incentive of about 15 per cent of lease’s value.
An initial lease period of 10 years is expected.
Grant Samuel, which is advising Australia Post on its national headquarters move from Cromwell’s 321 Exhibition Street, has put up APN’s 567 Collins Street development site as an option.
APN bought the site from soft drink millionaire Spiros Stamoulis for about AUD25 million midway through last year. The site has approval for a 50,000sqm office building.
The other option is for Australia Post to build its own tower on the former city mail centre site at 313 Spencer Street, at the corner of La Trobe Street. The facility has been empty since last year after the operation was moved to a site at Tullamarine in Melbourne’s north.
One problem for Australia Post is the 31,000sqm lease at its current 321 Exhibition Street headquarters building. Australia Post should be out of the building by September 2009, but with none of the three options delivering new accommodation before then the postal authority has had to seek a lease extension. Australia Post wants to sign a one-year extension, which is four years short of the extra five-year term sought by Cromwell.
