The South Australian Government is seeking a development partner to inject more than 17,000 square metres of new office supply into the Adelaide central business district through construction of a next-generation Innovation Centre that will take shape by 2027.

Announced by South Australian Premier Peter Malinauskas, the Innovation Centre will be the first new development built in the city’s Lot Fourteen innovation district, a purpose-developed hub focused on defence, space, cyber and critical technologies. 

An Expressions of Interest campaign for a development partner will open on Tuesday, October 1 through JLL, led by Ben Parkinson, Head of Capital Markets SA, and Jack O’Leary, Director of Capital Markets SA, acting on behalf of Renewal SA for the South Australian Government.

Mr Parkinson said the Innovation Centre – which had a targeted practical completion date of Q4 2027 – would have 77 percent of the project pre-committed on 10-year lease terms.

It will house over $100 million in state and federal government projects. These are a: 

• $60 million Australian Defence Technologies Academy, funded by the state and federal government as part of the Adelaide City Deal
• $20 million Innovation Hub, funded by the federal government as part of the Adelaide City Deal
• $20 million Space Assembly Integration and Testing Facility

BAE Systems Australia will also establish its head office in the Innovation Centre, as the major defence prime grows its defence presence around Commonwealth programs including the construction of the Hunter Class frigates and AUKUS submarine fleet.

The successful tenderer would secure a 100% leasehold interest via a 99-year ground lease as well as the opportunity for exclusive rights for the pipeline of future district development slated for Lot Fourteen over the next decade.

“The Innovation Centre represents a rare opportunity to deliver a project that will advance the continued transformation of Adelaide’s economy, technology and capability,” Mr Parkinson said. 

“It’s central to the evolution of Lot Fourteen as a district of national and global significance, particularly in relation to the state’s defence landscape.

“The project will be further supported by the upcoming merger of the University of South Australia and University of Adelaide into Adelaide University, which will launch in 2026 and shape an expanded focus on STEM and on areas such as defence, cyber and engineering.

“The combination and concentration of expertise and pathways from study to meaningful employment will help to cement Adelaide as a centre for talent attraction and retention.”

Mr O’Leary noted the development would also answer sharpening demand for good-quality high-end office stock across the CBD.

“JLL Research figures identify that on the back of a historically high supply wave which has recently concluded, there is a very limited future supply pipeline for Adelaide CBD office space,” Mr O’Leary said. 

“This is balanced by strong occupier demand for high-quality office space, noting that as of Q2 2024, the vacancy rate for premium-grade office space was just 8.1%, compared to a vacancy rate of 16.5% across the overall Adelaide CBD office market.

“And, of current vacant space, more than 75% is concentrated in just 13% of buildings.

“With minimal new projects scheduled for completion during the next few years, the injection of at least 17,000 square metres of net lettable area through the Innovation Centre, secured by government tenancies and future development rights in the district, shapes a powerful proposition for domestic and foreign investors.”

Lot Fourteen, established with a combined investment of $756 million by the state and federal governments, is already home to significant players in sectors ranging from cyber to AI, and research and industry powerhouses including the Australian Space Agency, the Australian Cyber Collaboration Centre and the University of Adelaide’s Australian Institute for Machine Learning. 

Expressions of Interest for the Innovation Centre at Lot Fourteen, corner of North Terrace and Frome Road, close at 3pm ACST on November 26, 2024.

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