Construction of a new ACT government office building in the city would prove more cost-effective than refurbishing the majority of Canberra's public service accommodation, real estate experts say.
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The government is considering both options to house thousands of public servants within 10 minutes' walk of the ACT Legislative Assembly.
Territory and Municipal Services directorate bureaucrats could be moved as their Northbourne Avenue home is earmarked for sale.
Colliers International director of investment sales and office leasing Tim Mutton backed a proposed newly built 40,000 square metre space on the site of an existing car park on London Circuit, as Treasurer Andrew Barr also considers refurbishment options.
Mr Barr put the project back on the agenda last week, calling for registrations of expressions of interest before a tender process for the $430 million construction.
First mooted in 2010, the project would be privately funded, with the government as a 25-year tenant.
Mr Mutton said the proposed new building was in line with market demand from interstate investors.
"I think something like this, with the government showing confidence in the market and coming with genuine requirement, is something that will attract more interest in Canberra, which obviously creates jobs," he said.
"We've had a really solid level of interest from offshore parties in the Canberra market and that is being missed by the media and a lot of the public."
Despite high office vacancy rates in Canberra, Mr Mutton said there were a relatively low number of contiguous, high-end properties currently available to large clients like government.
In January, Property Council of Australia figures showed the territory's office vacancy rate stood at 12.9 per cent compared with 10.4 per cent in the Australian market overall.
Coming as the Abbott government moves to axe 16,500 public service jobs, the vacancy rate is accompanied by falling non-residential building approvals, at $682.8 million in 2012-13 and down from $1.036 billion three years earlier.
"The stock that is available currently is in the C and D-grade accommodation [standards] and it is just not suitable for modern purposes," Mr Mutton said. "I think it is a simple argument to say an old building can be refurbished to be as good as [a] new one. We're at a point where some of the older buildings have to be looked at in terms of their future, to be demolished or re-purposed."
Building size, internal density and efficiency of layout were factors to be considered, Mr Mutton said, as well as services such as airconditioning and lift systems.
"Modern buildings can accommodate one staff member per 10 square meters, whereas older buildings are more like one per 15 or 20 square meters," he said.
Any new development also comes as the ACT Legislative Assembly moves towards expansion after the 2016 election and as the government pursues its ambitious City to the Lake infrastructure project and construction of a new convention centre nearby.
Last week, the opposition criticised the government's decision to leave the office building out of this year's budget and said it could add to high vacancy rates in the city.
Unions, the ACT Property Council and the Canberra CBD traders' organisation welcomed the plan last week. Three of four companies are expected to be invited to submit bids for the project.
