Geocon Constructors is adapting a 11-storey 1970s office block into a 3½-star Abode hotel in Woden Town Centre.

In a $31.5 million conversion due for completion in August, the roof, facade and glazing will be retained, while old office furniture, light fittings, air vents, aluminium and other building materials will be recycled, relocated or stored for other projects. Replacing Juliana House, the ghostly former Commonwealth Health and Ageing offices, will be 153 hotel rooms, blades will be fitted to the facade and an active ground floor will offer a bar and restaurant.

Geocon has built timber reycling chutes from every level of the old building in Bowes Street as they pursue Australia's first Green Star-rated hotel.

Geocon managing director Nick Georgalis said an enormous amount of embodied energy was in the redundant old building and that would be the key to achieving the Green Building Council of Australia's rating. ''If we were in a much stronger office market the building would not have been offered at the right price to make it work as well,'' he said.

Mr Georgalis bought the building from GE Finance.

Canberra's office market vacancy tops the nation at 11.9 per cent and, according to Jones Lang LaSalle ACT managing director Andrew Balzanelli, an air of cautiousness remains because of the federal election in September.

''All political parties are looking at introducing policies for reducing costs, particularly the Coalition, whose focus has also been on staff numbers in the public service,'' Mr Balzanelli said.

ACT executive director of the Property Council of Australia, Catherine Carter, said projects of this nature should be spared government lease variation charges, because they made good use of old buildings.

''It is a brilliant, adaptive re-use project, converting a redundant office building and providing much needed additional hotel accommodation in Woden.''

Mr Georgalis said the conversion to a hotel would withdraw 8500 square metres from the ACT property market.

''Getting these projects started, running the feasibility, financing it, consulting with community, making sure that we tick every box, ultimately, we have added a few more hurdles in creating the first Green Star hotel with Nabers [National Australian Built Environment Rating System] compliance.''

He said as offices the site required 180 parking spaces, as a hotel it needed only 78, and demand would come during the evening rather than during the day, adding passive surveillance to Bowes Street, which was another plus for social planning.

Geocon has hotels in Tuggeranong and Belconnen and targets the 3½-star sector, with new, basic accommodation without a minibar or room service.