Impact Investment Group to acquire Australia’s tallest Timber office building
Impact Investment Group (IIG), has partnered with global property developer Lendlease Group to develop, lease and manage the industry-leading 5 King office building, in Brisbane’s Showgrounds area.
IIG will fund the property through development, and own the property at practical completion, which is due in late 2018. The purchase price reflects a valuation around $140 million and a net passing yield of 6.5%.
5 King will be an office tower showcasing best-in-class environmental sustainability. It will have more than 14,000m2 of A-grade office accommodation over nine levels, and almost 500m2 of retail space on the ground floor.
IIG expects that 5 King’s design, construction and operation will put the property at the forefront of modern green buildings in Australia. IIG and Lendlease are targeting a 6 Green Star Design & As Built rating, the highest available accreditation from the Green Building Council of Australia, and a 5 Star NABERS Energy rating. The environmental performance is designed to come from 5 King’s use of new, sustainably sourced, engineered timber classes; Cross Laminated Timber (CLT) and Glue Laminated Timber (Glulam), as well as energy efficient LED lighting, occupancy sensors, optimised air-conditioning and rooftop rainwater harvesting.
5 King will be the tallest engineered timber building in Australia: Glulam for the structural beams and columns, and CLT for all the other major elements, including floors, lift-shafts and stairs. This modern version of timber construction comes from extensive research and development efforts across Australian and European industry and academia. Engineered timber buildings produce around half as much CO2 during construction compared to equivalent concrete and steel structures. They also produce less CO2 during ongoing operation.
The 5 King acquisition is the second major transaction for IIG and Lendlease. IIG CEO Chris Lock said “We’re very proud to be deepening our relationship with Lendlease on this highly innovative property.
“We’re committed to helping move Australia to a low-carbon future: We look for property investments with excellent potential for environmental sustainability; where we can fund best-in-class construction, or actively manage existing properties to drive energy efficiency and very positive social outcomes. 5 King is a great demonstration of how IIG invests in property.
“We believe our approach helps drive demand for real estate that benefits the environment and the wider community, and ultimately delivers attractive returns for IIG’s investors.
“Our long-term view on the Brisbane office market is that the demand will continue to strengthen, particularly for A-grade and new office stock in and around the Fortitude Valley and Urban Regen precincts.”
The anchor tenant will be the global engineering and infrastructure advisory firm Aurecon, also the project’s lead engineer. Aurecon has committed to a 6,500sqm, 10-year lease over four office levels and a small amount of the ground floor. “Aurecon is strongly invested in 5 King: not only do we take pride in the structural, ESD and building services engineering design, but the building will house some 600 Brisbane staff, or 8% of the staff in our global firm,” said Neil Barr, Aurecon’s Queensland Regional Director. Lendlease has provided 5-year rental guarantees for the remaining office floors and the ground floor retail spaces. Lendlease will also retain responsibility for leasing the vacant space during the construction phase, with all new leases subject to a number of contracted minimum terms.
5 King was designed by leading Australian architectural firm Bates Smart, an award-winning company with studios in Melbourne and Sydney.
5 King will be IIG’s second major office building in Brisbane, after K1 Kingsgate, a Green Star 6 Star – As Built certified commercial building in the same Showgrounds precinct, designed and built by Lendlease who is also K1’s anchor tenant.
5 King is one of the final projects to be delivered in the $2.9 billion renewal of the Brisbane Showgrounds precinct in Fortitude Valley, 1.5 kilometres from the Brisbane CBD.
The Showgrounds renewal started in 2011 and extends over 22 hectares of brownfield land. It is one of the largest urban renewal initiatives in Australia, including 340,000m2 of new residential, commercial and retail buildings. Brisbane Showgrounds owner, RNA, expects to attract 1 million visitors annually to the precinct.