Home World Business Google, Nike to sign Collins Street lease deals with Pembroke

Google, Nike to sign Collins Street lease deals with Pembroke

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Tech giant Google will set up its first Melbourne office in the heart of corporate Australia, leasing space in US property group Pembroke Real Estate’s signature Collins Street building.

Pembroke has been busy undertaking a major refurbishment of the T&G building at 161 Collins and is close to sealing a deal with Google as well as another key multinational tenant, sportswear brand Nike.

Renders of the planned refurbishment of the T&G Building at 161 Collins Street, now owned by Pembroke Real Estate. Renders of the planned refurbishment of the T&G Building at 161 Collins Street, now owned by Pembroke Real Estate. Photo: supplied

A third deal is also in the offing with co-working firm Regus Spaces.

Between them the three businesses have stitched up 10,500 square metres in the “Paris” end of Collins Street, a premium stretch likely to see them paying net face rents around $520 per square metre.

161 Collins Street, Melbourne. 161 Collins Street, Melbourne. 

Industry sources suggest any incentive offered, which is customary in most commercial leasing deals, could be around 27 per cent of annual rent value.

The flurry of leasing activity will boost occupancy of the T&G tower above 90 per cent at a time of growing demand for A-grade office space in Melbourne and Sydney, particularly from technology companies and co-working firms.

Google recently extended its lease until 2021 at Workplace6 in Sydney’s Pyrmont, where it houses the bulk of its Australian workforce.

It will add more space in Workplace6 when consulting firm Accenture relocates to Barangaroo.

Renders of the planned refurbishment of the T&G Building at 161 Collins Street, now owned by Pembroke Real Estate. Renders of the planned refurbishment of the T&G Building at 161 Collins Street, now owned by Pembroke Real Estate. Photo: supplied

The tech firm shelved a bid to find another 100,000 sq m home for its Sydney staff after delays in the Bays Precinct project it had earmarked.

Google’s Melbourne team has, until now, been working out of co-working space at 90 Collins Street, also operated by Regus.

Regus’ expansion into Pembroke’s building will boost its Melbourne co-working hub network to 25.

Over the past year it has taken 10-year leases over space in the top floor of Mirvac’s 367 Collins Street and on level 21 of Investa’s 567 Collins Street tower.

Neither Google nor Colliers International leasing agents Ed Knowles and Andrew Beasley would discuss the arrangements.

Google and Nike’s presence on Collins Street suggests the precinct still holds sway for offshore corporates despite other tech and creative firms favouring more gritty, city-fringe digs in Cremorne, one of the city’s hottest office markets.

Walt Disney Company recently confirmed a move into the former industrial Richmond suburb and online jobs board Seek said recently it will take 20,000 sq m in a new building at 60 Cremorne Street.

In the past two years, Linkedin, Twitter, Apple, Amazon Web Services, Atlassian and DropBox, among others, have leased CBD offices in Sydney and Melbourne.

Co-working companies, including WeWork, Servcorp and Wotso, are also leasing space that traditionally was the domain of banking, legal and financial service firms.

Twitter has expanded its lease in GPT-owned 2 Park Street in Sydney to 15,000 sqm and Amazon is understood to be looking for new offices in Sydney and Melbourne.

Pembroke purchased the 1930s-era building, one of Collins Street’s best known properties, for $275 million in 2015 even though its major tenant KPMG had committed to 20,000 sq m in billionaire Lang Walker’s Collins Square development in Docklands.

Earlier this year Pembroke signed up professional services giant Accenture on a 10-year lease to take nearly 8000 sq m for its Melbourne headquarters across two floors.

The refurbishment has also won over long-term tenant IOOF which signed up for a new 10-year lease, boosting its presence across two floors.

Pembroke chief executive Matthew Knight said the heritage building’s refurbishment would be complete early next year.

It will have 43,000 sq m of A-grade office space over 10 levels with campus-style floor plates of up to 4000 sq m.

“The Melbourne market is strong. There has been a lot of interest in the building. Tenants are recognising what we are trying to create,” Mr Knight said.

The large floor plates gave a distinct point of difference at the Paris end of the street, he said.

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