New energy

BRUCE MORIARTY is a local developer who recently snapped up the heritage-listed World of Energy building on Parry Street. In this week’s THINKING ALLOWED he explains why he thinks Freo has a rosy future and what’s prompted him to tackle the heritage lobby over turning the old museum into apartments.

Like it or not Perth will continue its incredible growth. If I had grown up in sleepy Perth I would probably hate the change but it’s not going to stop.

Forecasts may be for a downturn in the resource boom, but we’re still busy delivering on what has already been committed. If China’s growth rate is cut to nil, won’t they still be as busy as last year?

Meanwhile, the demand for our resource sector has squeezed other areas of our economy, such as the property industry—a significant employer.

Construction costs in Perth are so high buyers’ expectations are out of sync with what can be provided.

While I may not be the most sustainable Freoite I grew up in a household of 13 in Nova Scotia. It was crowded but nice. Do we really need single-family accommodation of more than 200sqm Or boomer apartments over 120sqm?

The planning regime introduce by mayor Brad Pettitt’s council may not turn this around immediately but it is going to help.

It’s easy to build a small one-bedroom unit at a price to satisfy investors or singles, but we need small, functional two- and three-bedroom apartments for young families or where young people can share the costs.

This is affordable housing. These are the sort of people Fremantle needs.

If I hold my breath and count to three, we will hear the predictable complaints about ghettoes, destroyed ambience and greedy developers.

But Fremantle is going to change. It will not remain the relaxed village it once was, separated from Perth by distance and attitude. It’s now virtually inner-city Perth and the next stop on the train line of renewal.

It’s a fantastic location, has incredible infrastructure and an unique environment—for  which we should be grateful to the heritage acolytes, Notre Dame and more than a few far-sighted developers.

I believe Freo has benefited from the global financial crisis and the pressures of the resource boom. A couple of years ago I was in town for the youth festival to see San Cisco with my kids and witnessed my first Tweed Ride. I realised something was different; a new trend, a revitalised culture, or maybe just the next generation?

Would Freo’s hipster have had the opportunity to thrive so well without the property downturn allowing many of them to stay on here?

Anyone who doubts there is a wonderful energy bubbling up from street-level Freo has not heard the music the kids are producing. They are certainly getting the world’s attention.

As for businesses closing up and moving on: Well, times change.

Cycles churn

In Sydney last year I was shocked by the for lease signs on Oxford Street. Business models change and cycles churn. It’s a shame about Dymocks, but are bookstore closures a Freo issue?

Those businesses that were required to renew their leases within the past three years would really have to question whether they could afford serious increases resulting from the property boom to 2008.

And… before anyone complains about greedy landlords who hold out for top rents—they should ask themselves whether they might also wait for a better return or stronger tenants.

Imagine you own a Market Street shop. The economy sucks and getting a tenant is tough. You can get some rent by dropping your expectation by say 40 per cent over an initial five-year lease.

You’ve just reduced the value of that building by 20-40 per cent depending on its quality. Sure, you can take the lower rent for five years and get a new tenant after that but you are still likely to have another extended vacancy period. Why not simply wait until things improve? Maybe let a pop-up have it for a year or two.

So why am I so confident things will improve in Fremantle? It’s really just about the cycle(s). No special insight here just one advantage of maturing years.

There have been significant properties changing hands in Fremantle in the past year.

I also expect the for lease signs will start disappearing as a new wave of entrepreneurs, mostly younger, rock into Freo with new business models. Rents are down possibly 15 per cent since our community bank renewal in 2010.

As for the power station on Parry Street, there will certainly be challenges.

While heritage listings can be complicated, the WA heritage council understands and support the necessity of making heritage work economically.

While a listing may scare others, I have been fortunate to have the advice and support of some wonderful resource people, especially Guy Weguelin, in relation to heritage matters.

I believe it is a wonderful opportunity. No-one could possibly afford to build such a formidable structure today to house really interesting apartments.

Also, I believe there is an opportunity to create some of the affordable housing stock I referred to above, at the rear.

We are going to need the support of Fremantle city council as the conditions Western Power has imposed are challenging, though not unreasonable.

As for the predicable complaints about greedy developers, my personal highlights from similar projects in the past are usually securing the opportunity, enjoying watching lots of smiling tradies knocking off from the building site on Friday arvo, seeing people move in and having the bank release my director guarantees when we have paid it all back.

But if I am right about Freo and the cycles… we might just be ok.

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