Veriu Group is delighted to announce the opening of Punthill Tuggeranong – its first ACT property, and the third to open under the Group’s successful Punthill brand in the past 3 months.

Located in Greenway, one of Canberra’s major commercial and government hubs, the former Tuggeranong Innovation Centre Office Precinct has been converted into a stylish state-of-the-art 76-apartment hotel, offering a mix of modern studio, one-bedroom, two-bedroom and three-bedroom apartments, designed to accommodate solo and group travel, for business or leisure.

Each apartment comes with a fully equipped kitchen, smart TV, desk and fast, high-quality internet, in-room laundry facilities and secure on-site parking, making the hotel the perfect option for both business and leisure travellers seeking the comforts of home.

Punthill Tuggeranong comes as a welcome addition to existing premium accommodation offerings for business travellers visiting Canberra for government work, conferences, and corporate events.

The new hotel’s convenient location close to key Government offices including Services Australia, the Australian National University, the Canberra Hospital, Questacon and the Caroline Chisholm Centre, as well as several of Canberra’s major transportation hubs and other amenities, are all expected to enhance its appeal to both short-term and long-term corporate guests.

Likewise the new hotel is expected to provide an attractive proposition for the growing influx of leisure travellers visiting the Capital’s popular landmarks and tourist attractions, attending its many festivals and events, or on route to and from the snowfields.

Punthill Tuggeranong also marks the debut of the Group’s first office conversion, with its second – Veriu Adelaide on King William Street, slated to open in 2025, and a further 4 – 5 CBD office conversion opportunities in the pipeline. The Group’s focus on adapting underutilised office space for apartment hotel accommodation is a strategic long term play according to CEO Zed Sanjana.

“With a permanent shift towards working remotely post-pandemic, there’s been a significant reduction in the demand for office space in recent years. That’s resulted in a steady increase in Australia’s national office vacancy rate as the supply of space, much of it baked in through new development, has outpaced demand – in turn leading to massive reductions in office values.

This has created significant pressure on owners of B and C grade office buildings in most states and territories, who are struggling to compete against newly constructed A-grade office buildings with modern facilities and tenant amenities. 

As land taxes and other holding costs continue to increase (particularly in Victoria for foreign owners), and with cashflow generation from these assets dwindling, office owners are being forced to face the reality of either selling their buildings significantly below their book value or invest significantly to restore future cash flows.

“At the same time, that’s presented an enormous opportunity for our business,” says Sanjana. “We already know the Group’s unique long-term lease model has proven attractive to developers seeking certainty of income and the ability to finance large scale developments more easily in the current market.

For owners of B and C-grade buildings considering the significant capex and lease incentive requirements to compete with A-grade buildings, the chance to reinvest in a different asset class managed by a hotel operator like Veriu, with a proven track record and a guaranteed long-term lease structure, is an increasingly compelling proposition.

“Readapting existing underutilised office space in prime locations also presents significant upside for us, as it allows Developers to minimise construction costs (as compared to new build) and complete projects much more quickly in markets where we’ve identified growing demand for quality CBD and suburban assets,” he adds.

Sanjana acknowledges that office conversion may not work for every property. “Our main driver is location – we’re looking for buildings locatedin areas driven by corporate travel demand, adjacent to offices, industrial precincts, universities, hospitals and major sources of transport infrastructure. 

"In terms of structural requirements, there also needs to be natural lighting on at least 3 sides of the building, along with a relatively compact floorplates with the distance from the building’s core to the light source ideally not exceeding 10 – 12M, to achieve the design and floor efficiencies required to ensure feasibility.”

Sanjana also flags the reluctance of many state and local government to embrace a more flexible approach towards planning regulations and building codes as another significant challenge impacting potential office conversion for hotels or residential accommodation during the current housing crisis.

“On the one hand both federal and state governments have acknowledged that much of Australia is experiencing a serious housing supply shortage; on the other, there’s a whole lot underutilised or vacant office space lying around in key CBD locations which could readily be converted to accommodation, often restricted by the rigid application of building codes.

"We’re lucky the local Councils we’ve dealt with to date have provided some dispensation to existing codes. But we really need Governments and councils everywhere to be more open-minded about allowing office conversions to proceed – especially if they’re serious about wanting to drive economic growth and tackle the current housing crisis.”

More announcements about the opening of new Veriu and Punthill apartment hotels at various sites are expected from the Veriu Group in the coming months.

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