“There has been nothing new developed in the legal precinct in the past 20 years. We expect it to lease up pretty quick,” he said.
The developer’s optimism runs counter to national trends that show Australia’s CBD office market vacancy rates increased from 12.2 to 13.3 per cent in the December quarter last year, according to JLL estimates.
Uncertainty around COVID-19 has prompted low levels of leasing activity across most office markets and an increase in sublease space.
“The Melbourne CBD vacancy rate was also influenced by an increase in sublease availability. Similar to Sydney, we do believe that some of these sublease offerings will prove challenging to lease and may be withdrawn when office occupancy levels move back towards the 75 to 80 per cent level,” JLL head of leasing Tim O’Connor said.
DeGroup is also pushing ahead with a $40 million retail complex in Sorrento that, upon completion ahead of schedule in April, is expected to be fully leased at above market rates.
The complex is benefiting from a boom in regional housing markets that, in turn, is priming demand for commercial real estate, Mr DeLutis said.
In the heart of the popular seaside suburb’s shopping strip, the centre at 80-98 Ocean Beach Road has nearly 2000 sq m of space across nine separate stores, including two large showrooms and 80 rooftop car spaces.
“Sorrento is booming because of COVID with people living and working down there. We achieved higher rents than we expected,” he said.