Canberra’s very green Nishi office block 80% leased as demand for premium office space rises: Colliers

One of Canberra’s greenest office building projects is now 80% leased as demand grows for premium-grade office stock with high environmental ratings, according to Colliers. 

Just two floors out of the 10 in Nishi Commercial – part of developer the Molonglo Group’s mixed-use NewActon project – remain available for lease, with office tenants set to move across in November. 

Office component

The building, billed as an end to “glass box” offices, has been designed by architecture practice Fender Katsalidis in conjunction with sustainable engineering firm Arup, the firm behind the iconic Beijing Olympic Water Cube and Gherkin building in London. 

The 21,700-square-metre Nishi building has been designed to meet five-star NABERS and six green star ratings and will fittingly become the headquarters for Department of Climate Change and Energy Efficiency, which is its anchor tenant. 

Other tenants include law firm Clayton Utz and the Australian Competition and Consumer Commission. 

It will feature the largest single-building solar panel installation (400 kW) on any commercial building in Australia and is classified as a Solar Farm under ACT Government legislation. 

Residential component

“Leasing one floor at Nishi is the equivalent to planting 1,387 trees or equal to preserving 7,500 square metres of rain forest annually,” says Rupert Cullen, state director of real estate management at Colliers, which has been appointed as building manager. 

Other key sustainable features included mixed-mode air-conditioning, an under-floor displacement air handling system and a high-performance façade that optimises daylight penetration. 

In its latest Canberra CBD office research and forecast report, Colliers says that since  2007 there has been “tenant-driven interest in modern, environmentally savvy buildings, and this trend has grown to present day”. 

A-grade office space has grown to 39% of available stock, “changing the profile of the Canberra office market from one of low-quality building to one of high-quality buildings, attracting long-term tenants, creating security and good cashflow for investors”. 

Colliers says that due to a limited amounts of new stock coming to the market in the first half of 2012, “the once tenant-controlled market is shifting to favour landlords with premium space”. 

Net effective rents for A-grade stock have risen 3.4% in the last six months, with the A-grade CBD market vacancy rate falling from 11% to 7.6% over the past two years. 

Investors who hold A-grade stock in the CBD can expect yields of between 7.25% to 7.75%, with one square metre of office space renting for between $425 and $500. 

Colliers says that over the next six months just three buildings – providing an estimated 3,750 square metres of space – are expected to be delivered in the Canberra region.

The Colliers report anticipates a pick-up in white collar employment growth from January next year, which will boost demand for office space.

Canberra, with a stable civil servant employer base, has one of the lowest unemployment rates in Australia, standing at just 3.8% for the fourth quarter of 2011, according to the ABS. 

This is 1.4 percentage points below the national unemployment rate of 5.3%.