Ok to investigate options for Executive Building, although keeping it unlikely to be sensible

Although I doubt it makes sense to keep the Queensland Government Executive Building, I have no problem with the Government investigating options for the future of the building, which was to be demolished to make way for the new casino. Given the new casino is still expected to go ahead, although perhaps its footprint won’t be quite as massive, I’m unclear exactly how the Government investigating options for the Executive Building will “erode business confidence”, as reported in the Courier-Mail this morning. This is a pretty minor issue compared with bigger issues such as environmental regulation that business groups will need to engage with the new Government on.

The Government will have to undertake a cost-benefit analysis (taking into account all future costs and benefits) of whether it makes sense to keep the Executive Building and not to take up the equivalent amount of space in 1 William St that it has committed to leasing, which it would then need to sub-let to the private sector. Obviously, the Government would then forgo whatever compensation it would get from the casino developer for giving up the Executive Building, and this would need to be considered.

Given 1 William St’s location away from the Golden Triangle centred on Eagle St, the portion of the building’s office space that would now not be needed for former Executive Building staff may be relatively unattractive to private sector businesses, particularly given CBD vacancy rates are high and may remain so for some time (see Brisbane CBD vacancy rate hits a new high). So the Government might have trouble finding private sector tenants for all of the vacant space and could end up with an even larger surplus of relatively poorly-utilised office space. 1 William St would still be housing other public servants and they might then expand their work areas to take up space that would have gone to staff re-locating from the Executive Building.

Considering the above factors, I suspect that keeping the Executive Building probably isn’t a sensible idea, but at the same time I have no objection to the Government exploring options.

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2 Responses to Ok to investigate options for Executive Building, although keeping it unlikely to be sensible

  1. Jim says:

    Gene

    Agree with you entirely. I suspect the viability of the keep/dispose decision for the Executive Building will rest on the conditions of the current agreement for renting space in 1 William Street.

    Sub-letting the space for offices might prove difficult given office vacancy rates (now and forecast rates). But taking a loss for a reasonable period (e.g. 10 years) might still prove to be a good outcome for the taxpayer.

    Given the fact 1 William St is only partially built (structural stuff only), is there a potential ‘Plan B’ such as several floors of the building used as a hotel or apartments? Brisbane is screaming out for more 5-start hotels and new apartments in the CBD are selling for about $5-6K per m2. Surely that is a much better return than you would expect from office space in the next 20 years?

    • Gene Tunny says:

      Jim, that’s a great idea that never occurred to me. I’m just unsure how attractive it would be to the Government (or guests/residents) however to have a hotel or apartments in a building mainly populated by public servants. Nonetheless it certainly should be considered an option. Thanks for the comment.

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