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Tech influx reshapes Sydney CBD

Tech influx reshapes Sydney CBD

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As the list of the world’s top multinationals becomes increasingly populated by technology firms, so too are the skylines of the world’s major business centres.

Sydney is no exception to this trend, with technology firms now more interested than ever before in being located in or around the city’s CBD.

Reversing the trend of many major IT companies wanting to base themselves away from each other in more secluded suburban locations a decade ago, Sydney’s CBD and fringe has emerged as Australia’s main growth precinct for technology firms and start-ups.

Information, media and technology (IMT) firms occupied of 6.2 per cent of the leased office space in the Sydney CBD in 2012. While enquiry rates for new space from IMT firms have dipped since their peak in 2014, they are still around 20 per cent of all enquiries.

Big name tech companies such as Google, Atlassian and Amazon are among those looking for large amounts of office space in the Sydney CBD or city fringe. Central Sydney has also been a magnet for start-up tech hubs such as Stone and Chalk, tech friendly co-working spaces such as Fishburners and innovation centres including Telstra’s and the Commonwealth Bank’s.

One key factor behind the push for CBD space by technology firms has been the war for talent. To attract and retain staff, technology firms are locating themselves in more central locations more popular among high-skilled tech workers and innovators.

The vibrant nature, diversity of retail and ease of public transport into CBDs makes them increasingly attractive to technology workers, who commonly live in inner-city areas. The increased residential population in Sydney’s CBD, along with its thriving entertainment, food and small bar culture, has made it even more appealing for this demographic.

The trend for large technology firms to move into CBD locations has also been playing out overseas, such as in Manhattan and downtown Chicago where Google has large campuses, San Francisco where Apple has recently leased a large amount of office space, Vancouver where Amazon has leased a large portion of office space, and downtown Seattle which has attracted a raft of cloud computing providers.

The increased demand for space has also been driven from the simple fact that many technology firms are still growing.

Google, which only relocated its Californian headquarters out of a garage in 1999, has expanded its Sydney office space from 2000 square metres to 19,500 since 2007 and is now looking to triple its floor area.

Twitter, which occupied a 50 square metre square metre serviced office in the Citigroup building in 2013, now occupies an entire 1839 square metre floor in the building. LinkedIn has grown its office space in the Sydney CBD from 768 square metres to 5350 square metres since 2011.

The Sydney-founded Atlassian is now also looking for more than 15,000 square metres, Amazon is looking to triple its floor space in the Sydney CBD to 10,000 square metres, while Apple recently leased six floors at 20 Martin Place.

The growing proportion of CBD office space being tenanted to tech firms has also required office landlords to rethink how they appeal to these types of companies.

As part of their war for talent, tech firms are seeking office spaces that may have been considered unorthodox a decade ago. While the beanbags of the dotcom era may have disappeared, tech firms are hunting for office spaces that have a point of difference and help promote creativity among their workers. And more importantly not have the blandness of traditional office environments.

The technology sector has driven the demand for green spaces in buildings and amenities such as end-of-trip facilities popular among health conscious staff.

Exposed ceilings, concreted floors and industrial decor is also in demand, with many technology firms seeking to create a warehouse-type work environment.

So too has the need for flexible and activity-based work spaces that can allow these firms to accommodate future growth. The collaborative nature of the work undertaken by these firms has seen the technology sector lead the demand for open spaces and atriums. And even less sterile office lobbies that welcome interaction and communal work areas.

With the technology sector now prominent in central Sydney, it will come of no surprise if it plays a key role in determining the future design and use of the city’s office buildings.

Chris Davis Head of Asset Management – Office & Logistics ....

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