Law firm Clayton Utz has agreed to renew a key 17,000 square metre lease at Dexus and Cbus Property's 1 Bligh Street in the tightly held market of Sydney.
The litigators, represented by LPC's Geoffrey Learmonth, ruled out a number of alternatives including AMP Capital's Quay Quarter, Brookfield Property Partners' planned 10 Carrington Street, Investa's 33 Bligh Street and Lend Lease's Circular Quay Tower.
Clayton Utz had originally taken on 23,000 square metres in the tower during the depths of the financial crisis in 2008, giving Dexus the key commitment it needed to proceed with the development of the tower designed by German architects Ingenhoven Architekten.
Clayton Utz chief operating officer Graeme Johnson said the firm was pleased to have re-signed for another 10 years from 2021 in "a world-class building".
"Having recently completed the re-fit of our Melbourne premises in 333 Collins Street, we're now looking at enhancing the design of our 1 Bligh workplace to create an even better environment for our people and clients," Mr Johnson said.
Dexus head of office Andy Collins said the landlord had developed a close working relationship with Clayton Utz.
"This is an important re-affirmation of Bligh Street's premium status and award winning design in the face of credible competition from a number of development sites."
The renewal will see Clayton Utz occupy Levels 5 to 15 at 1 Bligh Street, including an external terrace of 557 square metres on Level 15.
The tower is currently fully leased, and following the securing of Clayton Utz, the weighted average lease expiry of the building will improve to nine years from six years.
Cbus Property chief executive Adrian Pozzo said the environmentally friendly building was part of the way the landlord had won the tenant's continued commitment. "1 Bligh Street continues to be a leader in innovation and sustainability initiatives, and these shared values with Clayton Utz were instrumental in the parties reaching this new agreement," Mr Pozzo said.
Whether Dexus is likely to have benefited from any increase in rent through this new deal is yet to be proven.
Analysts at JP Morgan have recently said average rents were expected to rise at several buildings around Sydney including at 10-20 Bond Street to go to $900/$1,000 per square metre net from $800-900 per sq m. Clayton Utz is likely to have been on an original rent of about $1100 per square metre net with 4 per cent increases each year since leasing.
Other law firms having made major moves include Gilbert & Tobin at Barangaroo, Ashurst at 5 Martin Place, Corrs Chambers Westgarth at 8 Chifley, Freehills at 161 Castlereagh Street, MinterEllison at Governor Macquarie Tower.
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