The docklands Melbourne – western edge or western core?April 26, 2013 / By
Docklands comprises a 190 hectare site, including 44 hectares of water. (Source: Places Victoria) The precinct, currently entering its second decade of development, houses 8,000 residents with a further 30,000 workers. Upon completion, the site could encompass over one million sqm of office space with over 60,000 workers, attracting more than 20,000 residents. Building on its current achievements, Docklands is 10 years into a 20 year development agreement with Places Victoria and 50 per cent of the precinct has already been developed.
Docklands appears to have evolved ahead of expectations. It has successfully attracted high quality tenants and continues to boast high demand levels from corporates. So what is attracting tenants to this new location?
In the early planning stages, it was recognised that successful, office development in Docklands would require a high degree of product differentiation to compete with the CBD, Southbank and St Kilda Road. Rather than a competitor to the Melbourne CBD, the significant driving force behind the success and rapid development of Docklands has not only been achieved through organic growth within the CBD but the quality of stock, which is focused on low rise campus style buildings encompassing large efficient floor plates. Large corporate occupiers wanting improved efficiencies combined with more flexible office space have been able to achieve this in the Docklands precinct.
Since 2000 the geographical boundary of the Melbourne CBD has evolved, notably elongating as new development stretched into the Docklands. The late 1980’s / early 1990’s was characterised by a number of new towers stretching the original boundaries as far to the West at 600 Bourke and further down towards the Eastern end of Collins Street. With this emerging development, the Western end of the CBD continued to expand incorporating the Docklands and successfully attracting large corporate occupiers consequently shifting the heart of the CBD further West. Like the Southbank, occupiers were initially hesitant to relocate to Docklands, perceived as an area with limited transport infrastructure, amenities and at some distance from the traditional CBD. In 2001, National Australia Bank (NAB) was the first occupier to commit, taking a pre-let on 56,000 sqm at 800 Bourke Street. Medibank, ANZ and AXA all followed soon after, and by 2010 Docklands had attracted a core financial base of corporate tenants who had all relocated their headquarters to the precinct.
With the completion of Collins Square, Building 1, 850 Collins Street and 990 LaTrobe Street in 2012, Docklands has overtaken the Eastern Core as the second largest office precinct for prime grade stock (by NLA) in Melbourne, comprising 500,000 sqm or 21% of the CBD area. Docklands has only 226,000 sqm less than the Western Corridor, the CBD’s largest Prime grade precinct. Docklands will continue to grow over 2013 with the completion of Collins Square Building 2 and 700 Bourke Street bringing total prime grade stock in the precinct to 566,500 sqm. With 66% of CBD projects under construction in Docklands (156,700 sqm) it is feasible that within the medium term Docklands could challenge the Western Core as Melbourne’s most prominent office precinct.
Whilst still heavily financially driven, Docklands is now at the stage, similar to the Southbank, where a broader range of tenants are demonstrating an interest in the area. By positioning itself as an extension of the Western core for corporate, financial and services tenants, Docklands will continue to expand as a focal point for office development. Given the capacity of the precinct for more development, over the long-term, the precinct could be home to nearly one million sqm of prime grade stock – making it fast become a core location within the Melbourne CBD.
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