Telstra has signed a 12-year lease for an office building in Canberra to establish a new commercial precinct in the city.

The telco has established the centre to consolidate its operations and to support services for the Department of Defence, which signed a $1.1 billion contract with Telstra to supply telecommunications, network and mobile services to the department.

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16-18 Mort Street in Canberra will be refurbished by early 2014 and will house more than 1000 people across 13,250 sqm of space. Telstra staff at Northbourne Avenue in Dickson, National Circuit in Barton, Thynne Street in Bruce and Kent Street in Deakin will all be consolidated into the new building.

Telstra staff at Faulding Street, Symonston will remain at their existing property.

"This will be the biggest project our property team has undertaken in Canberra and the largest for the company so far this year," Vito Chiodo, Telstra property director, said in a statement.

"The end result will be an environment that is inviting but also reflects the high-tech and customer-focused nature of our organisation."

The office will include a new Telstra store and free Wi-Fi.

Investa Office Fund, the building owner of the Mort Street property, will fund the office and lobby refurbishments.

Telstra has refurbished more than 220,000 sqm of office space over the past three years.

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