Surry Hills office development

Hi all,

I thought I'd get a thread going now myself and my business partners have received DA approval for a boutique office building in Surry Hills

We exchanged on the site in June 2021 and submitted the DA 3 months thereafter. We went to Land & Environment court as soon as we could and eventually reached agreement with Council & the Court and officially received formal DA approval last Friday, 12 months to the day of exchanging the site. The main hold up was Council insisting on a forward in forward out onsite loading dock for a garbage truck, which would've required a turntable while we tried to argue the site was too small. We eventually settled on a compromise for a parallel loading dock (non-compliant) large enough for a van

Vacancy rate in Surry Hills for A Grade office space is approx 2.2% so we've timed it well and are looking forward to getting started on demolition when we settle in September. Lots of work to do between now and then to achieve CC

We've received a fair amount of leasing enquiry already off a few LinkedIn and social media posts which is encouraging

Next step while progressing CC is finance. We've had a few good offers from non bank lenders however would love the support of a major bank. Given the small floor plates we'll only be kicking off formal marketing 4-5 months from completion, when prospective tenants can walk the floors, so without pre commits it's looking difficult to secure major bank funding which we always knew, doesn't hurt to try though!

Construction costs have increased approx 30% from when we exchanged however we're lucky Surry Hills rents have soared leaving us better off than last year despite the increase in construction cost

I'll keep the thread updated as we progress through ECI, to CC, to Demo & construction commencement and through to leasing and completion!

Clifton Development Group Pty Ltd v Council of the City of Sydney - NSW Caselaw

Development Application Details | City of Sydney (nsw.gov.au)

 

Great project, well done, and congrats in advance - looks to be a serious development in an excellent location!

 

Majors will need direct project/scale experience - if you have this then it will come down to numbers, feasibility, presales, builder being on their panel, etc. This is one of the hardest types of lending.

This is an amazing development and well done - looking forward to seeing the progress.

 

My colleague and I who are running the development group have 30 and 10 years experience in projects this size and larger, up to GRVs of $600m, 210-220 George St, Sydney being the biggest, however this is our first where we have some ownership albeit minority

No presale given we intend to hold the building to take advantage of the upgrade to Oxford St and Central Station given we’re only 50m and 800m away respectively. Builders not on their panel but has 2 recently completed developments with one particular bank so that’s not a concern. It’s all down to pre commits which we have none and what type of security we can provide. Our capital partners are a well known non bank lender themselves so security is good, it’s just whether it’s good enough

 

Thank you! It’s starting to get exciting now we’re down to things like picking tiles, fixtures and fittings etc

 

This is our colour palette. Natural stone in the lobby, porcelain look alike in the bathrooms, natural look brass fixtures and fittings, polished concrete on office floors with the lift cores wrapped in fluted timber

The off white thin brick will be the brick on the exterior of the core shown in the first CGI

The site is highly constrained from a natural light perspective so we’re using light materials where we can

 

@lynchy From my quick skim of the judgement, there were very few areas of inconsistency which hadn't been adequately addressed ( FSR exceeded but below the maximum height controls, minimal impact on roads or other transport etc). The judgement is strongly in support of the proposal.

I'll even give you brownie points for: ”...the proposal encourages sustainable transport options by removing existing vehicular crossings and providing end of journey facilities and 25 bicycle spaces"

&

"...By adding a subsurface floor space for niche activities that would not normally be accommodated in a more conventional space above ground, the design offers a more efficient use of the land and thereby makes better use of the capacity of existing and planned infrastructure as compared to a compliant development."


Congrats

 

Thanks Scott!

We wanted to avoid going down the design excellence route given the cost and time involved. We were advised we should target an FSR “or” Height exceedance and not both and given we could hit that FSR without exceeding the height it was an easy choice

Council was super supportive of the development despite the objections from the owner of 1 Oxford St. we initially had about 30 contentions from Council regarding the proposal however this was narrowed down pretty quickly to the 1 being the loading dock

 

Unfortunately it's the game that they must play. Council needs to be seen to be doing the right thing for the objectors even where they support the proposal, by taking it to LEC the decision is 'out of our hands' & 'we have fought the development but lost' they save face with the community.

 

Exactly, which is why we took it to LEC the very first day we were able to

9 month approval for city of sydney is almost unheard of. Only possibly going down the LEC route which cost us an additional $250k

 

Still cheaper than the accrued interest.

 

Congratulations @lynchy ! It sounded great although I am an absolute novice in this sort of project. I am sure it will reward you handsomely when completed and keep us updated and I look forward to learning from it. Thanks for sharing

 

Thanks for sharing. Great to see

 

Looks good. Even though you have small floor plates I would seriously consider taking on pre-construction leases if you can as it will make funding so much easier. Just put in good sunset clauses in case construction times blow out.

Colour scheme looks good. Light but natural and similar to what I'm doing in a commercial centre. My only concern would be the polished concrete and acoustics.

 

We're putting in acoustic drop ceilings which helps a lot. 249 Crown St, Surry Hills had concrete floors and exposed services and acoustics was horrible - 255 Crown Street, Surry Hills, NSW 2010 - Office For Lease - realcommercial

52 Reservoir St, Surry Hills had the polished concrete floors and drop ceiling and acoustics were great - Leased Office at 52 Reservoir Street, Surry Hills, NSW 2010 - realcommercial

We would take on a pre commit if the numbers were right

The problem with the pre commits is listings get stale. 249 Crown St had a low key leasing campaign from commencement and although got some offers, they weren't great. They shut down the marketing, as it was getting stale and they became known for asking what were then record high rentals, until 5 months prior to completion. They ended up 75% leased at completion with record rents and 100% leased as of now being circa 8 weeks post completion

52 Reservoir St had no marketing campaign until 4 months from completion and leased 6 of 8 levels out prior to completion. They leased the last 2 remaining levels within 4 weeks of completion

Tenants being able to walk the floor is incredibly important in this market, particularly when we're in a really grungy location

 

Any numbers you willing to share? I saw in your docs a construction estimate of about 10m?

 

5.5 Star NABERS, 5 Star Greenstar and targeting Net Zero Carbon is proving to be difficult. Not a lot of buildings this size have targeted such high environment ratings and its meaning we require more room for our services than initially proposed. A heat pump for instance requires a service room of 25 sqm v a service room of 2 sqm for a traditional electric hot water system. The heat pump rooms also requires natural ventilation so it has to be located on the roof while the traditional electric hot water system requires far less ventilation and could have been located in the lower ground by the loading dock. The heat pump is approximately 70% more efficient. Gas is not an option as when targeting Greenstar of 5 stars or more, the entire building needs to be electric and 100% renewables

It's thrown in challenges such as having to reconfigure the toilets on each floor. We drop a toilet however the layout is better in ours and our leasing agents' opinion with a lobby being added


hos images gallery

With the added weight on the roof with the increased rooftop office size as well as the weight coming from the planters we've had to add an additional column which we're not happy with. It was either that or have a thicker slab in parts of each floor plater which we didn't want. The idea is for a really clean, elegant office space which requires a flat roof throughout the whole tenancy. It's a better outcome on the ground floor the 2 columns but does impact the typical floors



hos images gallery

 

Well done - very rapid outcome by planning LEC path early.

Just an idea but maybe invest in a small teaser website or even just a Facebook page to start collecting contact details of prospects. QR codes on hoarding when construction starts.

Thanks for sharing - will be interested in following your journey.

 

Thanks Smile, that's currently in the works

CGIs are being updated based on materials chosen and will be finished mid August and our marketing consultant is working on branding which should be ready by today

Once all that is done we'll get a website up and running. CGIs will be changing a fair bit from what is shown above so we didn't want to get a website up and going until we've updated them

It'll be bsed on this design which we like for the Fringe market

Welcome to Oxford & Foley, Sydney (oxfordandfoley.com.au)

 

I much prefer the 3 unisex toilet layout even though it's one less toilet. I can envisage gendered toilets being issues more in the future and this makes it private and future proof.
The door swing on the accessible toilet does appear to swing into the basin zone though?