Leif Olson from CBRE talks to Hamish McDonald about office design and the latest trends in the leasing of commercial buildings.
Hamish McDonald: What is retail leasing in commercial buildings and how is it changing?
Leif Olson: We really only look at the ground floor. But we work in with landlords on what tenants are above, and whether the retail is servicing them. We’re starting to see retail being less about the income and a lot more about amenities for the tenants who sit above. For example, this building has mostly government tenants, and this café’s $6.50 juice suits this market. The same thing up at the other end of town would cost you $13. But this area’s going to go through a generational change. It’s on the doorstep of something that’s really cool and innovative, requiring the best bars in Sydney. I was talking to a tech company earlier: they were saying they’d love Surry Hills but there’s not enough good retail that sits around, such as good small bars that really have a point of difference.
HM: There are at least three very big developments coming into Tech Central. What kind of workforce will they bring in?
LO: It’ll be a tech workforce. The New South Wales government has just introduced a rebate scheme where tech tenants that are expanding or growing will be eligible for a 40 percent rebate on their rent. That’s going to drive a lot of start-ups and scale-ups down to this area. For this bigger workforce you’ve already got the transport infrastructure – the heavy rail, the light rail, the buses. Having Atlassian build the biggest timber building in the world, that’s going to bring a type of workforce that hasn’t been seen around here before. And lot of the people who are going to work here live in pretty close proximity.
HM: What does that mean for existing office complexes, like Centennial Plaza, a set of three medium-rise towers on the old Toohey’s brewery just to the east of Central Station?
LO: This block is about 15 percent of the whole southern precinct of the CBD and it’s going through a repositioning to help attract tech tenants. The café on the ground floor will be something a lot more modern to attract people. On the office floors, instead of walking into a carpeted area with ceiling tiles there will be polished concrete floors and open ceilings and services. There’ll be a bar that sits inside. There might be a little coffee shop that sits inside those premises. And they might have bigger auditorium spaces that are communal areas. This café where we are sitting now will be a 200sqm bar with an auditorium space sitting above on Level 1, for functions, with a fine view over Central. And in underground areas, there can be small bars and centres for health and wellbeing.
HM: In Tech Central, will some of the retail actually move from the ground floor up into the building?
LO: There could be an element of that. There’s a fine balance. Some of these tech tenants who want their people to stay in their desks a lot of the time will provide lunch like the old law firms used to do. But what’s happened in the last two or three years with Covid is a lot more flexibility. So, to attract the best talent back to these buildings they’re going to do things that have a real point of difference, that they wouldn’t have thought of doing four or five years ago.
HM: I’ve read the Atlassian is going to have these open terraces high up, so that’s part of what you’re describing?
LO: They will likely partner with operators to go up into those buildings. Atlassian is a tech company. They’ll get the best coffee shop or bar operator to build these places that sit within their tenancies. But also, if you are sitting up on Level 21 of an office building and you want to go for a coffee, you can go down to the lobby because there’s a convenience factor. And people want to get fresh air, they want to walk to their favourite coffee shop, they want to get out and about, and connect to their colleagues on a different level. Wherever it is, it needs to be immersive retail, with a point of difference, one that stimulates different senses, not just sitting and having a juice.
HM: What is the size of the workforce coming to Tech Central, their typical salaries, their ethnic backgrounds?
We are looking at 25,000 innovation jobs in the tech space, and as many students in areas like IT and life sciences at the three nearby universities (UTS, Sydney, Notre Dame). Among the tenants will be the more established technology brands that pay high salaries, and then there’ll be the more start-up, entry-level ventures whose carrot to get people to come and work for those sites will be equity in the business, the chance to grow with the business. At the start, they might wear three hats, and they might be getting paid less. They might shop at a cool op-shop instead of buying a thousand-dollar pair of sneakers. You’ve got to market to those different categories of people.
The full interview can be found in the print version of the April-June issue of Architecure & design magazine.
Leif Olson is head of retail leasing Australia with CBRE
Image: Supplied
