O’Brien eyes rental market
FREMANTLE has too many shops and needs to rethink its CBD, says a prominent developer who’s realigned two of his upcoming projects to the city’s “new paradigm”.
Silverleaf Investments director Gerard O’Brien said while the move to online retailing by chains such as H&M and Dottie were already impacting bricks and mortar retailers, he was still bracing for the full impact of Amazon.
“They’re just so good at what they do,” Mr O’Brien said.
“For every one job we create from Amazon, we lose three jobs in the retail sector.”
He says that will also spill over into the construction industry and local councils who will lose out on rates.
“There is 2.4sqm of retail space throughout Australia per head of population, and we believe it should be 1.6sqm.
“The 0.8sqm is about a 30 per cent over-supply.”
Mr O’Brien said there was also more office space than needed in Fremantle, taking a swipe at Fremantle council for adding to the problem with the currently-unleased top floor of its new civic building in Kings Square.
“To compete with their own ratepayers and subsidise others does not augur well,” he said in a veiled reference to Sirona Capital’s purchase of the Queensgate complex from the council for a song.
While he thinks Fremantle’s “eclectic” mix of tourism, markets, port and a thriving arts scene puts it in a position to weather the storm, he predicts Perth’s outer suburban shopping centres could see vacancies of 60 or even 70 per cent.
The developer says what is in short supply in WA at the moment are residential options, so he’s rejigged the Woolstores redevelopment to include 200 build-to-rent apartments, while another 40 are planned to go at the rear of the old police quarters on Henderson Street.
“Every person needs a bed and a bath – they don’t need an office,” he said.
Although a residential landlord’s returns are more modest, he said governments could minimise rental taxes to provide incentives, while the European experience showed there could be long-term security perhaps not so evident in today’s retail market.
“They can be multi-generational, so you go into a single-room apartment, then when you get married and have children you can move up to a three-bedroom apartment, then when you retire you can move to the top floors.”
Mr O’Brien would also like to see the rates for Freo’s heritage-listed CBD buildings sliced by at least a third, saying that would provide an incentive for people to buy and restore them, saying there are plenty of upper floors lying idle because it’s simply uneconomic to bring them up to modern standards.
But he says the first step will be addressing the city’s “cringe factors”.
“We have accepted the shouting and the prickle factor of parking as the norm.
“The rewards are huge if we get it right; we’ve got to sweep the streets and go back to basics, which includes getting rid of the angry people in the streets.”
Mr O’Brien has significant land holdings in Hobart’s CBD and watched it go through lean times until the city hit crisis point and government, council and business leaders worked together and turned things around.
He says Freo’s businesses aren’t quite at the point of revolt, but believes they’re not far off and that could finally provide the catalyst the city needs to turn its fortunes around.
“If the rates go down by 40 per cent because there’s no retail market, all of a sudden people become united.
“When it affects everyone’s hip pocket, everyone gets involved.”
by STEVE GRANT