Australia Post looks set to sign a new $150 million lease at the Southern Cross West Tower, after confirmation from current landlord Cromwell that the postal authority will be vacating its home at 321 Exhibition Street, Melbourne, in 2010.
Last month Australian Property Journal reported that Australian Post was expected to sign up to occupy the entire building, which has 44,000 sqm of space.
Yesterday, Cromwell’s national asset manager Paul McDonnell said after months of negotiations with the government business enterprise, Cromwell decided the short-term lease-extension options being proposed by Australia Post were not in the best interest of investors, considering the unique opportunity the property presents in the 2010 leasing market.
“Australia Post’s continuing occupation of the building after 2010 would have presented difficulties in refurbishing the building to the standard we consider appropriate and in a timely manner. We now have the opportunity to unlock the value in the building.” he said.
In the absence of Australia Post, McDonnell said the company has already begun discussions with prospective blue-chip tenants that have major space requirements in 2010.
The building is now expected to undergo a refurbishment.
Meanwhile, Australia Post’s is expected to sign a 10-year lease with options, on a rental of $350 per sqm and on an incentive of 15% at Multiplex’s Southern Cross West Tower.
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The east tower is 100% committed to the Victorian Government and 75% owned by Multiplex. The two office tower developments will occupy a site which was once occupied by the Nauruan Government’s Southern Cross Hotel.
Australian Property Journal
