- Demand driven by flight-to-quality
- Firms big and small competing for office space the area
- Collingwood reputation growing as high-profile companies lease space
Collingwood’s office leasing market has been teeming with demand lately, as three newly built constructed office buildings were leased shortly after coming to the market; namely, 71 Gipps Street, 54 Wellington Street, and 88 Langridge Street.
What is flight-to-quality?
The robust leasing activity is believed to be driven by the flight-to-quality phenomenon.
Flight-to-quality is the tendency for investors to abandon their riskier assets and move towards safer investments during economic downturns.
Here, investors flock to high-quality properties situated in good locations, increasing the prices for these properties while the neglected lower-quality properties decline in popularity and price.
Regarding Collingwood, flight-to-quality is evident in the high demand from occupiers looking to lease A-grade office spaces in the inner-city suburb.
As we emerge from the worst parts of the Covid pandemic, businesses have realised how having a high-quality workplace improves worker satisfaction and productivity.
Collingwood office market heats up
Ben McKendry, Cushman and Wakefield National Director, Head of Metropolitan Leasing Office Leasing in Victoria, says Collingwood has attracted substantial demand for office spaces in Collingwood over the last 18 months due to its top-notch retail amenities, which businesses believe will compel workers back to the office.
“A prime example is Smith Street which continually ranks as one of the best retail strips in the world and occupiers want to be a part of that,” McKendry says.
“There has been a hive of office activity in Collingwood with recent office deals including Acciona’s lease of 3,650 sqm at 71 Gipps Street and Live Nation/Ticketmaster who consolidated both of their offices (CBD & Richmond) and moved into 2,800 sqm at 111 Cambridge Street.”
Recent examples of leasing activity include:
- Launch Housing’s upgrade to 1,500 square metres (sqm)
- Expression Australia’s relocation from East Melbourne to Collingwood, leasing 1,190 sqm
- Bank Australia’s leasing of 3,044 sqm after having sold their old building
- Justice Commission’s leasing of 1,500 sqm
- Today Digital’s upgrade to 830 sqm of space.
Co-working operator, The Commons, leased an additional location at 54 Wellington Street alongside their original Gipps Street premise. Additionally, Creative Cube entered the Collingwood market, leasing 2,992 sqm in the area.
The expansion of the two co-working space operators illustrates the development of the co-working sector as the competition over top-grade locations intensifies in Collingwood.
McKendry also notes that a number of prominent business entities have capitalised on the state of the market, upgrading within Collingwood.
For instance, both Swisse and Aesop leased 1,100 sqm and 1,869 sqm of office space on 88 Langridge Street.
“The presence of these high-profile companies in Collingwood speaks to the area’s growing reputation as a desirable location within the inner-northern city fringe for businesses seeking high-quality office space.”
Ben McKendry, Cushman and Wakefield National Director, Head of Metropolitan Leasing Office Leasing in Victoria
Vincent Tran, Cushman and Wakefield Director of Metropolitan Leasing and Office Leasing in Victoria, says that more than 39,000 sqm of office space has been leased in Collingwood since the second half of 2021, further proving how acute demand is in the area.
“Looking forward, 71 Langridge Street – a building of circa 5,400 sqm – was recently completed in Q1/ 2023 & 36 Wellington Street – circa 18,000 sqm is due for completion later this year; offering the next wave of brand-new office stock in Collingwood,” Tran says.
“Collingwood is the gateway to the northern suburbs of Melbourne, and provides excellent public transport networks to the north, all while being within close proximity to the CBD. We expect demand for the area to remain strong, spurring on further new development activity in years to come.”
