IS Cairns big enough for two new, five-star green-rated commercial office blocks?

It is the question being asked as a battle for potential tenants looms over on Sheridan St.

The battle is between the State Government and Hong Kong headquartered private equity group, Global Capital.

Both are planning multi-storey, energy efficient office complexes only metres apart and both are planned for completion by mid 2010.

The State Government announced on March 21 it would build its five-star green-rated building to house the growing number of public servants as the second stage of the William McCormack Place complex on Sheridan St.

The cost has been put at $79.5 million and provides 9500sq m of office space.

Only a matter of metres away on the same block of land bounded by Sheridan and Hartley streets is where Capital Globe plans to build its 11-storey Cairns Global Tower.

Development approval was given for this project by the Cairns City Council in December last year.

The $75 million project is also listing a five-star green rating and has 11,000sq m of office space and with a ground floor retail area of 4000sq m.

The question being asked is whether there is enough demand at the moment for such a quantitative jump in available space.

In addition to these projects, two others, Hedley’s Citi Central (7000sq m) and H&S Vision (4000sq m), have also added to the available office space.

The State Government believes there will continue to be sufficient demand for A grade office space to enable both projects to go ahead.

When stage 2 of the William McCormack Place project is complete, the Government will sell what it considers to be an unsuitable building at 36 Shield St and relinquish leases on other "unsuitable properties".

At present the Government leases 64 per cent of its office needs from the private sector and the William McCormack building will see this fall to 52 per cent.

But when you consider the two projects would add a further 20 per cent in available office space, it is hard to see the demand for both being there in two years' time.

In which case, either one would not be built (and sources say the Government would always win out) or the glut of available offices would force the rentals down.

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