Health Department EOI

The Northern Territory Government sought Expressions of Interest (EoI) for a new headquarters for the Department of Health. The Interest closed Friday 13 May.

The Territory government will consider options that include:

• construction of a new building or refurbishment of an existing building, leased to the Territory Government
• construction of a new building on behalf of the Territory Government

They are considering options for office accommodation located in either the Darwin CBD or Palmerston CBD.

Mr Styles said while Darwin currently has vacant office space much of it is dated, tired, old stock in need of upgrade.

The timing for the supply of the office accommodation would be subject to negotiation, however, indicative timing would be 2018-19. 

Unlike other capital cities, NTG effectively controls the office market. Over the last several years, government initiatives have significantly increased the supply of high grade office accommodation in the Top End. This has been significant factor in rise vacancy rates to over 20%. The Top End already has the highest vacancy rates across all capital cities so the government must be cautious about further stimulus initiatives. 

At the moment, there is no demand for additional commercial office space. This EOI will do one of two things: 

• Further deteriorate the commercial property market into conditions not ever seen in the Territory, or;
• Allow existing stock in the Darwin CBD to be refurbished, which will increase employment in our capital city, and improve business conditions for not only the commercial property sector, but also significantly improve the residential market and retail sector in our capital city.  

If no existing office space is used by the Health Department and only new office space is utilized, we will almost certainly see vacancy rates exceed 30%. This will further depress the commercial property sector into conditions not ever seen in the Territory. This will not only affect the Darwin City Centre, but the commercial property market across the Top End. The economic impact of such a decision is something that the commercial property market may not be able to recover from.

However, this expression of interest also has the opportunity to bring the commercial property market back to sustainable levels, and increase commercial, retail, and tourism activity in our capital city. This will not only benefit Darwin City Centre, but the entire Top End by improving business conditions across the region. 

Some of the existing office stock in the city is in good condition. Other stock in the city has the potential to be upgraded to a suitable standard. Refurbishing existing properties will require a significant amount of investment and will help support the local construction sector, in particular small to medium size contractors. 

Once this existing office stock is refurbished, the result will be improved market conditions that will likely spur additional construction activity in the long term. At the moment, market conditions do not support additional commercial construction activity. 

If the Territory Government believes it is necessary to consolidate Health Department staff, this can be done by simply using the existing stock in the Darwin City Centre. All of the potential properties are in very close proximity to one another. If the government proceeds down the path of utilised existing refurbished office space in our capital city, it’s a win-win scenario for everyone:

• Using existing refurbished stock provides the Territory Government with lower rental rates compared brand new office accommodation. 
• The Territory Government will gain efficiencies by having all health department staff in walking distance. 
• The commercial property market conditions will improve, enabling further commercial investment activity across the Top End in the longer-term. 
• The increased construction activity related to the refurbishment of existing buildings will help improve the construction sector. 
• The retail sector in the Darwin City Centre will improve and allow for further private sector investment in our retail and tourism related sector.
• Support the commonwealth government’s national initiatives to increase the overall all performance of our capital cities.