Telstra has moved to significantly reduce its costs of leasing major CBD buildings in Melbourne and Sydney with the announcement it has just completed the largest lease agreement ever in the Australian commercial office market.

Under the agreement Telstra will extend its leases at three strategic CBD locations - 242 Exhibition Street in Melbourne and 320 Pitt Street and 231 Elizabeth Street in Sydney - comprising more than 115,000 square metres of office space.
 
Telstra's Chief Financial Officer, John Stanhope, said the transaction was another indication of Telstra's confidence in its business and the agreement was an important milestone in the company’s property transformation.

Stanhope said that, as part of the agreement, Investa will undertake a major refurbishment of the three buildings over the next 2 years, encompassing Telstra's office areas, retail space and building services.
"Committing to long term leases on this scale shows that we are confident of our business model over the medium term. There are significant economic benefits flowing from this project including the creation of around 1500 construction jobs.

“As well as allowing Telstra to use its existing office space more efficiently, the project also offers commercial benefits. This project will deliver significant annual lease savings to the business and also gives us the opportunity to reduce our footprint in these capital city locations."

Telstra's Property Director, Vito Chiodo said that with the recent announcement of Telstra's 13,000 square metre lease at Grocon's QV development, the company could now look to consolidate its presence into fewer buildings in the Melbourne CBD.  The deal announced today would also allow the company to consolidate its Sydney operations into the strategically located Pitt Street and Elizabeth Street buildings.

Chiodo said that since July 2005 Telstra had exited 113 commercial sites across Australia, reducing its nett lettable area (NLA) by over 199,000 square metres and delivering $77.8 million in annual lease savings.