Overcoming Several Unexpected Difficulties

After the site’s existing building was demolished by JHG, construction of the new building began in 2019. The construction work generally proceeded smoothly, but the project encountered several unexpected situations. For the underground construction, it took time to cut through Sydney’s unique hard sandstone, and when forest fires broke out in eastern Australia in early 2020, smoke from the fires spread to Sydney, blanketing the city in white smoke. Due to the heat caused by the smoke, construction workers had to work shorter hours at each construction site in order to ensure their safety, and this extended the building’s construction period by about one month.

However, the real difficulty came when the COVID-19 pandemic reached Australia. Due to the rapid spread of the pandemic, the Australian government stopped accepting visitors from abroad in March 2020, and activities within the city were restricted in order to prevent the spread of the disease, while office workers could continue working from home. Fortunately, during this time, construction was allowed to proceed with the imposition of thorough disease control measures, and 275 George Street was completed in December 2020—approximately six months later than originally planned—following a frame-raising ceremony in July 2020. The pandemic continued even after construction was completed, causing tenant leasing to suffer. In February 2021, Scape (an Australian student dormitory fund management company) signed a contract with Daibiru to become the building’s main tenant, and the occupancy rate was approximately 20%. However, economic activity was sluggish due to the pandemic, and the increase in telecommuting was making the prospects for office space demand uncertain. JHG, the company in charge of leasing, was running out of options. Under these circumstances, Daibiru took the lead in attracting tenants after hearing through employees stationed in Sydney since the end of 2019 that several Japanese companies were considering office relocation, and four Japanese companies (Nomura Research Institute Australia, the Japan Chamber of Commerce and Industry in Sydney, Mitsui O.S.K. Lines Australia, and KDDI Australia) had decided to move into our building. In particular, the Japan Chamber of Commerce and Industry in Sydney is an organization whose members include many major Japanese companies that operate in Sydney, and its monthly board meetings were held in a conference room in our building, which greatly enhanced the building’s appeal to the Japanese community. Daibiru also took the initiative in attracting tenants by creating showrooms inside some of the vacant units.

Another wave of the pandemic struck in June 2021, and there was another municipal lockdown in Sydney, but as the vaccination rate increased, restrictions were gradually eased, and activities within the city resumed. The leasing environment improved significantly in the first half of 2022 and Daibiru secured new tenants. The contract ratio reached 88% by the end of December 2023, and we expect to achieve full occupancy in the near future.

Through our investment in 275 George Street and the operation of that building, Daibiru’s presence in Australia has greatly increased, and with it our ties to major Australian companies. Daibiru will continue to take on further challenges in order to achieve its forthcoming investment goals in Australia.