Damasa development of a $25 million office building, car park in Central Wagga delayed into 2025

Plans for the construction of a five-storey office building and six-storey car park in Central Wagga have been delayed by soaring building costs and labour shortages and is still yet to break ground a year after it was approved by Wagga City Council.

Council gave the go ahead for the $25.5 million proposal in April 2022, which would see the plot of land at the of Morgan and Docker Streets, developed to provide more than 6700 square metres of office space as well as about 500 new car parking spaces for the packed suburb.

The 22-metre high structure was due to be completed in the middle of 2024, but construction is yet to begin, making that date unlikely.

Construction firm Damasa are developing the project and director Manuel Donebus said the original plan was for construction to start last year but the difficulty sourcing material and the exploding costs for those materials has delayed the build significantly.

"The rise in building costs has obviously been a factor because it's taken construction costs above budget and we've been working to rationalise those," he said.

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"The initial plan was to be under construction last year, but because of this rise in building costs and the builder we're working with was committed to other projects, that means we have to wait a little bit."

That rise has seen the initial estimates for the project blow out by 30 per cent.

"Labor costs have gone up as well, that initial $25 million estimate was for a cold shell build, mainly structure and face, concrete steel, glass, foundations, it's those main elements that have driven rising costs."

Planning a major project has totally changed in the time it has taken to get this project off the ground and due to the difficulty in sourcing materials at a fixed price, builders are now reluctant to work on a fixed price, moving the risk onto the developer.

"The biggest challenge at the moment ... when you go into a development like this you would normally fix the price and the builder takes the risk on any movement in prices," he said.

Mr Donebus said factoring in that risk can sometimes make a project "unfeasible" for a developer.

Another issue hindering progress is the tight jobs market, Mr Donebus said.

"Given the amount of work in the area and the shortage of labour, it's taken a little while for the builder to mobilise to get to the starting blocks," he said.

"It's quite a challenging environment."

Locking in tenants has also been a complicating factor as the rental price quoted 12 to 24 months ago now has to be stuck by, despite the building costs shooting up, which means "diminishing margins and returns on investment", he said.

They currently have 25 per cent of the building's tenants confirmed.

Damasa now hope to be on site and underway by July this year and would like to see this build complete by early 2025.

This is stage two of a multi-stage $180 million overhaul of the block at the centre of Morgan, Murray, Forsyth and Docker streets.

Development of the site which will eventually see 180 residential apartments, 13 three-storey townhouses and new retail space, as well as the office and car park.

Mr Donebus said plans for stage three in its current design exceeds budget and Damasa are working to bring costs down and hope to have a development application before council in the coming months.

This project was somewhat controversial at the time it was approved.

During the exhibition process the development application attracted 45 submissions, 35 of which were positive, while nine objected to the plan.

Opponents cited a range of issues, including that the building will be out of character with its surroundings and the negative impact that the construction phase will affect parking availability, noise and traffic.

Central Wagga Action Group member Chris Roche - who is in support of the development, but not of the size of the development - said residents in the area haven't been provided with updates on the project.

"If the development has been delayed we as residents have not been kept up to date with what is happening with the application.," he said.

"Out of respect I would have thought someone would have kept us up to date - no one knows what is going on."

Mr Roche said the delay means a longer period of construction which will heavily affect already chaotic traffic in the area.

"It means a longer period of having construction workers at the precinct," he said.

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