QBE secures new Sydney digs

QBE secures new Sydney digs

26 July 2019

Insurance giant QBE Insurance has joined the rush for office space in Sydney’s CBD by signing an 11-year agreement to occupy nine floors of the 388 George Street tower in Sydney’s CBD, says The Sydney Morning Herald.

The insurer will amalgamate its current two offices at Chifley Square and 2 Park Street in the new 11,950-square-metre anchor lease.

Because it will occupy 51 per cent of the building, QBE has snagged the building signage rights.

The 28-storey tower was previously known as the American Express tower, and was the head office of NRMA and IAG.

The building, which is jointly owned by Brookfield Properties and Oxford Investa Property Partners, is currently undergoing a $75 million major redevelopment.

Upgrades include a five-storey retail and commercial addition, extensive on-floor works, upgrades to the lifts and end of trip facilities, as well as new and expanded ground floor retail, says The Urban Developer.

QBE Australia Pacific chief executive Vivek Bhatia said the group has developed a “detailed approach” to its property strategy “to ensure it aligns with our future-focused agenda”.

“It allows for changes in workplace practices, support of multiple working styles, such as flexibility and collaboration, and will improve the employee experience with a focus on wellbeing,” Mr Bhatia said.

“The changes also offer QBE an opportunity to reduce costs by improving the efficiency of the space it occupies.”

QBE’s new home will complement its lease at the GPT-owned 32 Smith Street in Parramatta, which is due for completion in late 2020.

The lease deal comes as the listed real estate investment trust property landlords prepare for the upcoming reporting season.

The state of the national leasing market will be revealed on Thursday, August 1 when the Property Council of Australia issues its bi-annual office market reports.

While some REIT analysts predict a softening leasing market, investors remain buoyant about owning properties.

JLL’s head of office investments Australia, Rob Sewell, said foreign investment into office assets had an uptick in the second quarter, to total $3.52 billion for the first six months of 2019.

JLL Research figures show national office investment markets recorded $8.5 billion of sales, worth more than $5 million over the first six months of 2019, including offshore and domestic buyers.

This compares to $8.27 billion of sales recorded in the first six months of 2018. For the full calendar year in 2018, $19.76 billion of sales were recorded for the office sector.

“With the federal election behind us, and the Reserve Bank of Australia having cut interest rates for two successive months, investor sentiment is likely to improve over the short term,” Mr Sewell said.

“The interest rate cuts are yet to wash through the commercial property sectors, although overall the cuts are a positive for the property investment market.”