Charter Hall wins approval for $200m Melbourne office tower

Charter Hall has received development approval from the Victorian government for a $200 million office tower at its Wesley Place complex on Lonsdale Street in the Melbourne central business district.

The new A-Grade office tower at 140 Lonsdale Street to be developed by the Charter Hall Office Trust will comprise 16,500 square metres of office space over 22 levels and will mostly retain the existing above-ground carpark, providing approximately 380 car spaces.

The $2.6 billion unlisted trust will build the tower at the Lonsdale Street precinct as part of a bigger $600 million project after Charter Hall acquired the development rights to the 7400 square metre "holy acre" island site from Leighton Properties in 2015.

A premium-grade tower with 58,000 square metres of vertical campus-style office and premium retail space across 35 floors at 130 Lonsdale Street is already under construction and being developed by another Charter Hall unlisted trust, the Charter Hall Prime Office Fund. Both towers are due for completion by mid-2020.

CHOT also owns the existing 29,000 sq m office building in the precinct at 150 Lonsdale Street anchored by a lease to Telstra. The completion of both towers will bring Charter Hall's investment in Wesley Place to $1 billion. Charter Hall's total group office portfolio is worth $9.5 billion.

"CHOT's investment and exposure to Melbourne's CBD continues to grow through its existing portfolio of high-quality assets and our in-house capability to originate projects from within our portfolio, where it is prudent to do so," said fund manager Trent James

"The revitalisation of Wesley Place and surrounds also provides our investors exposure to a revitalised part of Melbourne's CBD where substantial development is currently under way or in approval stage, and once completed will transform this part of the city."

To date, Charter Hall has secured pre-leasing commitments across 50 per cent of the new office space, with TelstraSuper and Cbus Super announcing last month they will locate their head offices at Wesley Place.

It is understood that investment services firm Vanguard has also been secured as a major tenant, while the The Australian Financial Review previously reported that Japanese advertising and media relations firm Dentsu, which is looking for up to 20,000 sq m of new office space, was showing interest in the development.

Wesley Mission Victoria and Uniting Church in Australia have also committed to long-term leases as part of the original deal to develop the church-owned land through a 125-year leasehold deal.

Charter Hall's head of office development, Andrew Borger, said: "The Victorian government's support for this new tower will contribute to the development of the Wesley Place precinct, which will be transformed into a world-class workplace and lifestyle precinct that combines the rich heritage of the site as well as creating a new vision for Melbourne's CBD."

Charter Hall is targeting 5 Star Green Star and 5 Star NABERS ratings for the new development. Lendlease's construction arm is building the first tower.