The shift of Sydney’s business heart

September 30, 2014 / By

The business epicentre of Sydney’s CBD is once again on the move. Since the 1960’s, the business centre of the city has been shifting as land for new development diminishes, occupier requirements evolve and regulatory changes impact where the most prominent legal, financial and business firms base themselves.

From the beginning Circular Quay was considered the financial hub, centred around the AMP building on Alfred Street. Constructed in 1962 and double the height of any previous building at 116 metres, this building put Sydney on the map as an evolving global city.

The deregulation of the financial sector, initiated in 1985, brought a number of international banking organisations into the city. The financial sector expanded rapidly, and the Reserve Bank of Australia located in Martin Place, assumed greater importance. Accordingly during the 1980’s the centre of Sydney migrated south to the Martin Place- Macquarie Street axis, where major banking HQs were located as well as the New South Wales parliament.

Artist’s impression of Barangaroo

During the 1990’s the availability of development sites was limited. This, combined with the fact that Sydney has natural boundaries (water to the north and west, natural park to the east), resulted in a number of new buildings being developed in Darling Quarter, to the south west.

So what are the major drivers today for tenants to move operations and how this is impacting on Sydney CBD’s epicentre?

Since the Global Financial Crisis the two main drivers of corporate decisions are cost control and productivity. This drives many business decisions, including office location. Consolidation has become a big part of many firms’ corporate strategy over the last few years. Westpac Bank, for example is moving from nine sites around the CBD into two locations, its existing HQ at 275 Kent Street and 60,000 sqm in the new Lend Lease development on the Western corridor of the CBD at Barangaroo. This contiguous work space environment will limit accommodation costs and drive productivity.

The amenity that is being created by Barangaroo is an enticing factor for tenants considering relocation to the western corridor – improvements to public infrastructure, enhancements in retail, facilities and new parklands to the north of the site. Other benefits for tenants moving into a new office building include large floor plates, the latest sustainability credentials and a modern work place environment that will fit the occupiers’ needs. While the first office tower at Barangaroo will not be completed until the second half of 2015, the project is already causing a wave of anticipation. As a result the epicentre of the Sydney CBD is once again on the move – this time, westwards.

Advances in information technology, financial deregulation, changing tenant and employee requirements and scarcity of land – these are among the forces that have driven the shift of the city’s epicentre over the years. The next question you have to ask yourself is: where will the Sydney CBD epicentre be in 20 years’ time?

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