Amid surging rents and record low vacancy rates, fast-growing hotel tech company Siteminder has rejected the gleaming, corporate office towers of the Sydney CBD, choosing instead to lease a converted former woolstore in Sydney's historic Miller Point precinct at The Rocks.
Siteminder, which this year surpassed $100 million in revenue putting it on the cusp of unicorn status ($1 billion valuation) will replace advertising agency Publicis as the new tenant at Bond Store 3 on Windmill Street from next June on a six-year deal. Its landlord is IPO candidate Primewest.
Sankar Narayan at his new office spaces at Millers Point James Alcock
Speaking to The Australian Financial Review, chief executive Sankar Narayan described the cost of renting office accommodation in the Sydney CBD as "not for the faint-hearted".
"We've never found rents reasonable, but the right location is a lot more important so it wasn’t strictly a financial decision," he said.
Mr Narayan declined to reveal what Siteminder will pay to rent the 3686 square metre premises spread across four levels.
It was advertised at a gross asking rent of $850 per square metre.
Office vacancy rates in the Sydney CBD have fallen to 11 year lows of 3.7 per cent, according to the latest Property Council Office Market Report while A-Grade office rents have surged above $1000 a square metre after a number of years of double-digit growth,
While Siteminder was able to come up with a shortlist of about 10 spaces, most of them were in the middle of CBD office towers.
Mr Narayan said he wanted space that reflected the character of the company.
"We wanted big areas and social spaces, where team members can get together. You don’t find those attributes in a normal office building," he said.
The Heritage-listed former Woolstore, which Primewest purchased in 2012, has been carefully restored and offers high ceilings, exposed timber, lots of natural light with views of Sydney Harbour.
"The premises had character and offered an open environment. They weren't formulaic," said Mr Narayan.
"What we do as business is create software disruptive of global markets. So we wanted an environment that fostered innovation and allowed teams to work together."
"We needed to make sure people are excited to come to work everyday.
"We spend so much of the week in an office environment it needs to suit our purpose and what we stand for.
The relocation will see Siteminder consolidate from three seperate premises into one.
"By the time we move we will have over 400 people," Mr Narayan said. "We're happy with the deal."