London Quarter project at block 40, section 100 scrapped by Walker Corporation

An industry source believes the decision could wipe $2 billion from the ACT economy.

The Canberra Times last year revealed the Department of Employment and Workplace Relations alongside the Department of Education and the Australian Electoral Commission planned to move to the 11-storey building on the corner of London Circuit and Northbourne Avenue in mid-2026.

But developer Walker Corporation advised the government agencies on Thursday evening the project at block 40, section 100 City would not go ahead.

The agencies had signed 15-year agreements for lease at the 70,000-square-metre site from the middle of 2026. The AEC's agreement with the Trustee for Walker Northbourne Property Unit Trust was worth $261 million, an AusTender contract notice reported, while the other agencies had not yet posted agreements.

The agencies had not yet executed leases for the building, and are now "working closely with involved agencies and the developer to finalise arrangements", a spokesperson for the workplace relations agency said.

"We will then work to determine next steps, including longer-term accommodation options."

A parliamentary committee approved the move in March, and it was expected to consolidate the departments' 11 leases, saving approximately $9 million a year. The fit-out for the new building was expected to cost the government $149.26 million.

Existing leases were due to expire between October 2023 and May 2025, and the agencies had planned short-term extensions to facilitate the London Quarter move.

A spokesperson for the NCA on Wednesday advised that after accepting a works approval application for the site in April, the authority had asked Walker to make significant adjustments.

"After an initial review and extensive discussions with the design team, the proponents have agreed to amend their application in relation to height, size, and scale of the building," they said.

"The adjustments to the design were informed by the National Capital Plan and the National Capital Design Review Panel."

On Friday, a Walker spokesperson said the developer had worked "very hard with the National Capital Authority to obtain works approval to deliver this significant project, for our long-term and valued clients DEWR and AEC".

"Despite the best efforts from all of the project team, the ongoing delays with obtaining that approval are such that the ability to meet our client's delivery timeframe is no longer possible. For that reason, the project will not be proceeding as planned.

"We want to thank the City Renewal Authority, the project team and of course our incredibly hard-working consultant team for all of their efforts in trying to obtain the works approval."

An industry source told The Canberra Times on Thursday the NCA had been the "only roadblock" standing in the way of the development moving ahead.

They said despite the developer and the three Commonwealth tenants being "in alignment", the deal fell over as a result of the development process.

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The ACT government's City Renewal Authority first advertised block 40, section 100 City, for sale in February 2021.

The future of block is uncertain as the sales transaction with Walker Corporation was contingent on development approval.

It is understood the sale figure was in the vicinity of $60 million.

A City Renewal Authority spokesperson confirmed the agreement had not yet settled.

"We've learnt today that the Commonwealth and Walker Corporation have mutually terminated their agreement for leased office accommodation," the spokesperson said.

"In 2022 the territory issued several conditional land sale contracts to prospective developers for the Commonwealth's office requirements, therefore we are awaiting the Commonwealth's decision on how they will progress."

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