Amazon will move into a new Australian headquarters on Market Street in the heart of the Sydney CBD as the technology giant steps up its global expansion.
Amazon’s search for a headquarters in the US set the commercial property market alight and had cities lobbying to secure the technology and consumption giant, however its movements in Australia have been closely guarded.
In Australia where it opened last year, Amazon already occupies office space at 2 Park Street in Sydney, jointly owned by Charter Hall and GPT, but is now set to replace the Commonwealth Bank of Australia, Allianz and Caltex at 2 Market Street also owned by Charter Hall.
Allianz is leaving the building after it sold its half stake in the tower to fund manager Charter Hall.
Allianz occupies more than 18,000 square metes in the building’s total of near 40,000 sq m in office space.
The second largest tenant in the building is Caltex which occupies more than 9,000 sq m. The Commonwealth Bank of Australia is also a tenant and will be vacating in 2021.
The US online behemoth has been making as much impact in the commercial property market as it has in the retail sector, where it is challenging not only department stores but more recently Coles and Woolworths with its groceries line.
While most of the focus on Amazon’s arrival in Australia has been on its challenge to traditional bricks and mortar retail, the US player has also become a big player in the real estate market.
Amazon made its much anticipated Australian debut last year in Melbourne’s Dandenong South, securing a 24,387sq m former Bunnings distribution centre from Melbourne’s Pellicano family.
The online retailer will open its second distribution centre in Sydney’s southwest after leasing a 43,000sq m industrial facility at Moorebank from Goodman Group..
Amazon’s expansion is part of a broader theme driving demand in commercial real estate as the new powerhouses in disruption make their presence felt.
The information, media and technology sector led demand for office space in the third quarter this year, according to Cushman & Wakefield.
WeWork has been particularly active in this, securing around 24,000 sq m of lease commitments, including recent high-profile tenancies in Lendlease’s award-winning Barangaroo South precinct in Sydney and at 222 Exhibition Street in Melbourne.
Amazon’s move into Market Street will squeeze vacancy even further in Sydney’s booming office market where average A-grade office rents have now passed $1000.
Amazon’s US ‘HQ2’ will be Amazon’s second headquarters in North America. It is expected to invest over $5 billion in construction and grow this second headquarters to include as many as 50,000 high-paying jobs
Sydney CBD’s vacancy rate tightened to 4.6 per cent from 4.8 per cent in the six months to July, with landlords now expecting vacancy will drop to well below 4 per cent as the available space shrinks further due to withdrawals.
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