ASX-listed real estate investment trust Growthpoint Properties Australia has announced plans to add two new office towers to its Botanicca corporate park in Richmond.
The $2 billion property trust, which is majority-owned by South Africa's Growthpoint Properties, will now deliver 19,300sq m of premium office accommodation in east Melbourne.
The two-tower building, known as Botanicca 3, was designed by architecture firm Gray Puksand with Hacer Group enlisted as construction partner.
The decision to build Botanicca 3 follows long-standing leasing deals with Country Road and David Jones at Buildings 1 and 2.
Growthpoint's managing director Tim Collyer said these deals had created the opportunity to explore the best potential use for Building 3, which is currently a single-storey office building.
“Securing 15-year leases to Country Road and David Jones on Buildings 1 and 2 at Botanicca gave us the opportunity to investigate the best potential use for Building 3,” Collyer said.
“While a range of options were considered to activate the site, the opportunity to grow the portfolio and create a brand new office building on a large parcel of under-utilised land in Richmond is the best outcome for our security holders.”
Low vacancy rates and rising demand in Melbourne’s office market has created the perfect environment for new builds on the fringe of the city's CBD.
The office vacancy rate in the Yarra precinct is 7 per cent, well below the long-term average fringe vacancy rate of 9.3 per cent.
Rent growth in the Richmond area has been strong, rising 15 per cent over the past 12 months.
Growthpoint expects the new development to deliver a fully let yield on development cost of between 7.5 per cent and 8.5 per cent.
Colliers and JLL have been appointed to handle the leasing with discussions ongoing with some of the largest listed and unlisted companies with a footprint in Melbourne.