It’s taken almost 20 years but, finally, Docklands is being embraced not as an extension of the CBD but as a precinct in its own right, with its own nuances and its own tenant mix.
Docklands is not for everyone. Nor is the east end of Collins Street, the west end of the CBD or the Flagstaff precinct. But each sector attracts its own type of tenant for a variety of reasons.
Docklands has now evolved to the point where buildings are entering their second generation, such as 700 Collins Street (recently re-leased to Metro Trains, Open University and Pacific Hydro) and 825 Bourke Street, which will soon be offered to the market for the second time. 850 Collins Street has now been largely leased on the back of being able to offer tenancies of various sizes, from 300sqm to 700sqm (National Heart Foundation, CSL and Rubik). This, in turn, is creating new sub-markets by providing opportunities to tenants previously shut out of Docklands based on their size.
We expect to see a continuation of the trend westwards in 2018. Here are five key factors we see as integral to the increasing popularity of Docklands:
1. Accessibility: The free tram service that now extends from Spring Street to the Collins/Bourke Street junction has had an enormous impact in connecting Docklands and the CBD. Easy and regular connectivity to Southern Cross station, the retail heart of the CBD or parliament is a single tram trip away and importantly, it is equally easy for clients and visitors to get to.
2. Amenity and lifestyle: This is the key differentiator. Docklands has stopped trying to be the CBD – it’s being Docklands. Greenery, outdoor bench seating, public barbecue, sporting amenities – it’s all part of the aesthetic that Docklands is now known for. For years, we have seen marketing images of people working on laptops outside in a park, on the grass. Go down to Docklands on a reasonable day and there are actually people doing it. Also, the food and beverage retail offerings which have been hit and miss for a long time now rival that of the CBD.
3. A variety of opportunities: Until recently, the only tenants that could consider Docklands were those “super tenants” who could pre-commit to a whole building. Over time, this has evolved to a full floor, typically around 2,000 sqm. Now there is something for tenants of almost any size – from those as small as 40sqm at 838 Collins Street and serviced office or co-working tenants in a variety of buildings within Docklands, to large businesses with requirements for multiple floors.
4. SMART buildings: flexibility, technology and efficiency. Because Docklands is so new, it is synonymous with these factors. It has also been able to provide cost effective accommodation to ‘super tenants’ whose size precluded them from development opportunities within the CBD grid. Campus-size floor plates were only ever an option in Docklands but these buildings also forged the way for greater densities due to new design and technologies. And until recently, the cost difference was significant – although we are now seeing that diminish dramatically.
5. The evolution of commercial place-making: Necessity is the mother of invention. The biggest hurdle to overcome with bringing tenants to Docklands was previously staff retention. Commercial place-making was essential in providing comfort to employers that a move to Docklands would not result in a mass exodus of staff. The provision of a wide range of amenities and facilities in the immediate precinct has been paramount to the success of Docklands in attracting major tenants. As a result, we have recently seen ANZ commit to a further 26,000sqm at 839 Collins Street and Medibank relocating within Docklands to 720 Bourke Street.