A vaccine to Freo’s vacancy pandemic

SARAH BOOTH and KATE HULETT are the hardworking souls behind Spacemarket, which pairs disused spaces with useful people. Since 2011, Spacemarket has matched over 400 tenants with more than 40,000m2 of floorspace, including the MANY projects in Fremantle. Spacemarket have mapped out the vacant spaces in Fremantle CBD, many of which have sat empty for more than two years. In this week’s THINKING ALLOWED they argue Freo shouldn’t be looking to fill shops with businesses allied with industry from the Western Trade Coast, but with funky, interesting retailers who’ll help draw back the crowds.

THE number of vacant shops and commercial properties around Fremantle’s CBD is a highly visible problem.

Vacancy spreads like a virus. It makes us feel disconnected; it has an insidious psychological effect on a personal and community level. It affects our pride.

But what is the cause, and what can we do about it? 

It’s time to start having an open and honest conversation about empty buildings so we can help return our streets to their vibrant and thriving potential.

When it comes to vacancies there are many factors at play; online shopping, cautious spending, bad business, urban sprawl, fast fashion and a pandemic. 

Yet almost 90 per cent of Australian retail spending continues to pass through bricks and mortar premises.

And the problem isn’t a lack of businesses hoping to operate in Freo. 

Spacemarket has a list of (over 30) exciting tenants who would love to open up in our CBD. 

These are interesting, independent and innovative businesses – the type every town desires, the type that make people visit, browse and stay. 

They are not “allied” mining businesses – a solution suggested in a previous Herald article (“Trade coast hope to fill empty Freo shops,” August 21, 2021).

The main problem here is that landlords refuse to reduce rents to meet the market. 

And the reality is, if you own or inherit a property within a CBD you should – in the name of economic prosperity, community, tourism – have an obligation to do something with it.

Freo, like many city-centres, is in a post-gentrification market. 

Prestige tenants are not interested in joining deserted high streets. 

The gentrification boom, when brands take note of a place, move in, and drive up rents through demand, is over. 

Those high-value tenants have moved out, but rental rates have not adjusted accordingly.

Put simply, rents need to drop. 

Just like when a residential property owner leases a property, they adjust the rent to an amount people are willing to pay.

Why do we not see this reflected in the commercial property market? 

One factor is that keeping rents high allows property owners to maintain the ‘on paper’ valuation of their asset. 

So, for many landlords, there’s no incentive to decrease the rent. 

An empty property also acts as a tax write-off, which can be appealing for some property owners too. 

In short, it can be beneficial to leave properties empty.

The impact of allowing these commercial spaces to remain vacant is that regeneration is stunted. 

It’s a Catch-22 — to attract bigger tenants back to our centres, we need to make our cities healthy again. 

Yet prosperity and growth won’t cycle back around while there are streets full of empty shops.

Property owners can’t ride this out and direct the blame elsewhere. 

They are a vital part of the solution and need to actively assist in re-establishing economic prosperity. 

Offering market-aligned or at-cost rent will help get Freo back up and running. 

It will benefit the businesses, consumers and the city. 

It will even benefit the landlord. 

It will save our city.

We need to support those landlords who actively seek to rent their properties, and penalise those who leave them empty – our city depends upon it.

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