Sensational-Adelaide.com

Quest Serviced Apartments to operate residential side of Kyren Group's $100m project

by: Giuseppe Tauriello

From: The Advertiser July 23, 2012

QUEST Serviced Apartments will operate the residential component of Kyren Group's $100 million mixed-use development on Franklin St as part of an expansion across the state.

Under the lease agreement, which covers the group of apartments as a whole rather than individually, the number of apartments in the project will rise from 101 to 117.

Quest is bullish about the state's business tourism market and is in negotiations with developers for more locations in Adelaide, including sites at the southern end of King William St and the eastern end of Flinders St.

Quest general manager Andrew Weisz said major projects, including Rundle Mall, the Adelaide Oval redevelopments and the new Royal Adelaide Hospital, were a key factor in the company's decision to expand its presence in the state.

"South Australia is experiencing a continued increase in corporate traveller demands, with major business projects and developments under way across the state," he said.

"Quest's occupancy levels and revenue are strong and continue to grow. With Quest Whyalla opening in September, the business is now at the stage of requiring new inventory in South Australia in order to meet the increasing corporate demand."

The franchisor's Whyalla project will comprise 56 apartments, adding to its four CBD locations and its Mawson Lakes and Whyalla Playford facilities.

Before reaching an agreement with Quest, Kyren Group had marketed the Franklin St apartments for sale for three months. But according to managing director Theo Samaras, a soft residential market and a City Council unwilling to "incentivise" inner-city living made sales difficult.

"We had a lot of interest but no one wanted to sign a contract," he said.

"I've been lobbying for three years with State Government and council on how to bring more people into the city and things like stamp duty (concessions) a couple of weeks ago; that should have been a combined effort between council and State Government."

"For example, on this site (Franklin St) council rates were about $60,000 a year. On completion, on the commercial side, whether leased or not leased, the council will benefit anywhere between $500,000 to $600,000, and on the residential side around $150,000."

"Surely they (Adelaide City Council) should look to assist not the developers but the residents to get them to come into the city."

Having secured a residential tenant, Mr Samaras was hopeful the office component of the project would attract renewed tenant demand.

Three floors have been pre-committed, including the top two levels of the 17-storey, 20,000sq m office building, to law firm Piper Alderman. Colliers International director Nicholas Shinnick said further tenant announcements were imminent, with the upgrade of Victoria Square an attractive proposition for tenants.

"This section of Franklin St is undergoing an incredible transformation at the moment and this site is positioned to take full advantage of that opportunity," he said.

Mr Samaras admitted it was a risk undertaking a speculative development in the midst of an economic downturn, but he already has his sights on his next project - continuing a strategy of mixing uses to reduce risk.

"We have an offer in place on another site and it has to be a mixed development," he said. He also has ambitions to expand into Perth, having visited the city earlier this year.

Mr Weisz said a franchise operator for Quest on Franklin would be selected closer to completion of the project later this year, before an official opening in April.