Bank of Queensland to anchor-tenant FKP office building at Gasworks development

Bank of Queensland (BoQ) has pre-committed to lease 56% of the office space in FKP’s ‘Gasometer 2’ office development within the Gasworks site on the banks of the Brisbane River.

BoQ has committed to lease 13,100 square metres of space in the A-grade office building over 12 years with renewal options for a further 10 years.

The office building forms past of the mixed-used urban renewal project at the 6.4-hectare site, which will also include a Mirvac master-planned community and a retail component.

The leasing deal is good news for FKP, which recorded a fall in profits of 22% in the 2012 financial year, with Peter Brown to step down as managing director by February.

Goldman Sachs analyst Peter Zuk labelled the leasing commitment from BoQ as “positive” and revised its earnings estimates upwards.

In terms of potential profits, Zuk says FKP has not yet confirmed if it will take full development risk during the construction phase and look to sell the asset on completion or sell it on a "fund-through" basis like it has done on other office developments in the past, “whereby its potential realised profit will be lower, but at the same time reducing its development risk”.

Construction of the office tower is due commence this month, with completion expected in "late 2014", with an anticipated end value of $180 million.

The Gasworks project is bounded by the Brisbane River, Longland and Wyandra streets, Breakfast Creek Road and Waterloo, Gordon and Evelyn streets.

It will feature apartments, upmarket retail and leisure outlets, A-grade office space and a plaza with the iconic gasometer frame as its focal point.