Lovett Tower in Woden.

Lovett Tower in Woden.

Canberra’s tallest building, Woden’s Lovett Tower, is set to become a near-empty shell when hundreds of public service occupants move out in two years.

The news that at least two-thirds of Woden’s landmark block will be emptied out will come as a hammer-blow to the retail and office precinct, already being hit hard by public service cuts.

The federal government announced on Wednesday that the Department of Veterans’ Affairs will move most of its 630 Canberra-based bureaucrats from the tower in the city’s south to the CBD in two years in a move the government says will save $84 million.

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Veterans Affairs occupies 15 floors of the 22-storey landmark, with Environment and Prime Minister and Cabinet leasing the rest of the space.

The department will move into empty space in Civic leased by the Australian Taxation Office, which is moving to try solve the problems caused by having 4700 work stations sitting idle throughout the nation.

The veterans’ department confirmed on Wednesday that it would keep its Woden shopfront open.

The Canberra Times revealed on Wednesday that the Environment Department, which leases several floors in Lovett Tower, is about to cut another 200 jobs and could downsize by up to 25 per cent in the coming years.

The two pieces of news, delivered in less than 24 hours, of more than 800 public servants moving away from Woden will be greeted with dismay by the area’s service and retail employers, already battling tough times.

Other major Woden public service tenants like Health and the former FaHCSIA department, taken over by PM&C, are either downsizing drastically or gripped by "Machinery of Government" upheavals that mean they can’t guarantee their future in their present offices.

The northern section of the once-thriving town centre is now beset by tens of thousands of square meters of empty offices in run-down 1960s blocks, failed retail and hospitality businesses and shut-down federal government shopfronts.

Commercial real estate agent Greg Lyons said the departure of Veterans’ Affairs would hit Woden’s town centre as the department’s Lovett Tower space represented up to 7 per cent of the precinct’s office market.

The head of sales and investments at Jones Lang LaSalle ACT said the Woden town centre had 192,000 square metres of total office space and more than 15 per cent of it was sitting empty.

“It will throw a bit of a cloud over the market in the short term,” Mr Lyons said.

“There’s probably not a lot of anticipated growth in the public service so finding a tenant in the next two years will be difficult.”

He said the 40-year-old building, owned by Brisbane-based property giant The Cromwell Group, was B or even C-grade office stock and would need a major upgrade to attract a tenant while competing with other large buildings nearby, discarded by the public service and also seeking new occupants.

Shop owners in Westfield’s Woden Plaza spoke last month of worsening trading conditions, blaming the public service departure in part for their troubles.

“Business has declined so much over the last few years in the plaza,” one trader, who asked not to be identified,  said.

“I’ve been in the plaza for 28 years and I’ve seen the decline. 

“There’s a lot of factors, but the public service going doesn’t help … it’s just another nail in the coffin so to speak at Woden Plaza.”

Another shop owner also identified a declining public service workforce as a factor in struggles at Westfield.

“The loss of the public service across the road has been a big factor, there have been a lot that have moved from here to Tuggeranong and there’s continually cuts over here as well,” the retailer said.

“The housewife doing the shopping, she used to come over here at lunch time but now she’s not here… it’s becoming a one stop shop as far as Woolworths and Coles goes as well.”

Neither the Environment Department, Prime Minister and Cabinet or The Cromwell Group responded to inquiries on Wednesday.