Chinese video-sharing service TikTok agreed to lease 4,800 square metres (51,667 square feet) in the tallest office tower in Sydney during the first quarter of 2022, as tenants across Australia upgrade to premium spaces amid a struggle to attract staff back to their offices.
The company, which is owned and operated by Chinese unicorn ByteDance, committed to lease levels 18 to 21 of Lendlease’s Salesforce Tower, said Tom Broderick, head of office and capital markets research for Australia at CBRE.
Situated within the Circular Quay neighbourhood, the 55-storey Salesforce Tower anchors Sydney Place, a A$1.9 billion ($1.34 billion) mixed-use precinct being developed as a joint venture between Australian developer Lendlease, China’s Ping An Real Estate and Japan’s Mitsubishi Estate.
Lendlease, when asked to confirm the transaction, told Mingtiandi that it “does not comment on speculation”, while TikTok did not respond to queries about the deal.
Occupiers Levelling Up
In its Australian Office Figures Q1 2022 report released this month, CBRE included TikTok’s agreement to rent portions of the Salesforce Tower as among the most notable deals in Sydney, along with financial services firm Barrenjoey’s relocation to AMP Capital’s Quay Quarter Tower.
“I think as a general trend, we are seeing a lot of tenants upgrading across the Australian office market,” Broderick said. “Our data suggests that of all relocations we recorded in 2021, the median increase in rent on a dollar per square metre basis was plus 9.3 percent.” He added that CBRE believes the trend “is partly related to business leaders trying to encourage their staff back to the office, by offering a better experience in a better building”.
Across Australia, the commercial real estate services firm flagged 12 notable leasing transactions in the first quarter. Of those deals, five were relocations, five were renewals and two were for new offices.
According to Broderick, tech tenants have been integral to this trend. In its Asia Pacific Office Trends Q1 2022 report, CBRE said tech firms during the first quarter stayed active and remained willing to pay more for space in premium buildings.
In Sydney, tech players snapped up an estimated 12 percent of leasing volume during the period of 2021 to the first quarter 2022, according to Joyce Tiong, head of forecasting and data analytics for Australia research at CBRE.
Aside from TikTok, other tech firms involved in similar transactions are software company Atlassian, which partnered with Dexus to deliver a new headquarters in the Tech Central precinct of Sydney’s CBD, as well as online food delivery app Menulog, which upgraded and expanded to move to the International Tower 3 in the central Sydney city of Barangaroo.
Players in the technology, media and telecommunications sector were the second-biggest driver of office leasing enquiries in Sydney in the first quarter, CBRE said. The TMT sector accounted for 34 percent of all office leasing enquiries in the city, behind only potential tenants from the financial services sector, which accounted for 42 percent.
Salesforce Leases Up
At the 56,000 square metre Salesforce Tower, TikTok will be joining the anchor tenant, American cloud-based software company Salesforce, which committed to leasing levels 34 to 53 of the building. Commercial property services firm JLL will also relocate its Sydney headquarters to the building where it will take up levels 25 to 27.
The tower, which is is expected to be completed by the third quarter of this year, is already 76 percent pre-committed and will add 54,000 square metres of net lettable area to the Sydney CBD office supply upon its expected completion in the third quarter, according to Cushman & Wakefield’s Sydney Marketbeat Reports issued last month.
Venture capital company Investible will open on levels one to three in the Greenhouse hub for climate technology and innovation, while co-working space operator The Executive Centre committed to take up 2,200 square metres across levels 22 and 23. Also occupying space in the building is asset manager Wellington Management, which will relocate from Investa’s Deutsche Bank Place at 126 Phillip Street.
Lendlease said earlier this month that it would offer new commercial suites on levels 31 to 33 of the building. The suites are expected to appeal to businesses that want premium-grade office space in a high-profile location and with the flexibility of short-term leases.
The Foster and Partners-designed office tower has floorplates measuring between 1,200 and 1,300 square metres. At its base, the property will feature retail and community experiences with space for 23 retail tenants.