infill – PropertyESP

Say what you want

For PropertyESP, the last couple of months have really highlighted the need to have a dialogue with the general community about what they do want to see, when it comes to infill in Perth.

After recently working with a progressive metropolitan council, we were able to reflect on their vision for their City centre and it was clear that, despite their expectations, what was being delivered by developers was not in alignment with their long term intent.

This led to a discussion where the Council admitted that while the vision was alive internally, it wasn’t publicly understood outside of the organisation.

And that led to the staff considering, just how do we sell the sizzle to our community and beyond?

Another example is Lumiere in South Perth. This lengthy battle, which was started by a small group of residents, has finally resulted in a positive outcome for developer Edge. However, the residents who opposed this development (which was originally at 29 storeys) are now facing the likelihood of 34 storeys instead.

It appears that with this negativity occurring towards infill, we are witnessing delivery of outcomes that in fact compromises all parties. If Edge was permitted to proceed with the original plans, I am sure that this would have been the preferred outcome for all parties.

While it is beginning to become accepted that apartments will undeniably be a part of Perth’s future, what developers, local authorities and planners are failing to do is engage with the people who support this concept to determine what it is they want to see. What are the design elements, materials, height, activation at the street level, etc. that are appropriate for their community?

When faced with a prejudice or ignorance, it is the role of leaders to inform, educate and encourage dialogue. And PropertyESP believes that through this process outcomes that are acceptable to, even welcomed by, all parties can be achieved. And while some may consider this risky, we consider this as just good community development.

If you would like to discuss this concept further than contact Samantha Reece on 0452 067 177 because she is all about meaningful dialogue!

Car parks vs infill (the debate continues)

Samantha Reece attended the recent Committee for Perth luncheon where Dr Julian Bolleter of Australian Urban Design Research Centre (AUDRC) tested the idea of finding room for density.

Dr Bolleter stated that from 2001 – 2010 Perth had seen the clearance of 351 hectares of land to make way for greenfields development, something that many will argue is simply not sustainable.

But Dr Bolleter provided some other alternatives for accommodating our growing population, which really were quite eye opening.

As he stated, 20% of the Perth suburban core are backyards which equates to 132sqm/person. In the UK this figure is 75sqm/person. If the Perth suburban core was to reduce our backyards to 75sqm/person we could accommodate 115,000 new infill homes.

Dr Bolleter then spoke about the fact that 12% of the Perth suburban core is asphalt, which represents 78sqm/person. These represent car parks and the like. In Manhattan this ratio is 9sqm/person. If Perth was just to reduce this ratio to 64sqm/person than this could accommodate 203,000 new infill dwellings.

Freeway reserves represent 20sqm/person and if we could reduce this to 16sqm/person this would accommodate 50,000 new dwellings. And as Dr Bolleter stated, if we made these light industrial areas, this could generate 95,000 new jobs and allow for the development of affordable housing where people can work and live in the one precinct.

And finally Dr Bolleter examined the golf courses. At present there is 14sqm/person of golf courses in the core suburban area but when you look at the Mt Lawley golf course, its membership base of 1000 represents 900sqm/member. With golf club memberships declining, and a golf course in the USA shutting its doors every 48 hours, this is certainly something that could be considered for density.

As Dr Bolleter stated, if we could reduce the golf course ration to 7sqm/person this alone would accommodate another 86,000 infill dwellings.

At the end of the day, it is obvious that there are opportunities to accommodate more houses and people in our city, we just need to be prepared to think outside the box and we were very grateful for Dr Bolleter’s insights and the chance to change our paradigm of thought!

Whilst some of Dr Bolleter’s suggestions would impact on Perth’s declining green space and tree coverage, an already acknowledged issue, rethinking our use of space could open up residential and employment opportunities … and create the demand needed for improved public transport – something that is also essential to Perth’s growth.

What do you think about this concept?

Colliers predict some positive signs

Samantha Reece attended the Market Update hosted by Colliers International last week.

While some sectors may be feeling slightly nervous about WA’s economic future, the Colliers team showed data which demonstrated that we should still be feeling somewhat optimistic.

Yes, private investment did peak in 2013/14 with a 1 in 100 year event, but the forecast for ongoing private investment until 2025 is still $30 billion per annum and this is threefold what it was in the late 1990’s and early 2000’s.

And while these mining projects have propelled the investment engine, there is still another 12-18 months before they will come to their natural conclusion.

Population growth peaked at 90,000 a year, during the boom and this has come down to 30,000 a year. It is expected that this will rebound to 40,000 a year in the next 12 months, and this is still twice the population growth that WA was experiencing in the 1990’s.

The ABS predicts a population growth of another 800,000 residents over the next 14 years. Ultimately they will need to be housed.

Interestingly, regional WA’s contribution to national GDP has grown from 7% to24%, however all the focus for population growth is still centred on the Perth metropolitan area.

With the mining sector coming off the boil, we are seeing other sectors such as retail, accommodation, public administration, scientific/professional/technical services and the education sector all growing.

Overall mining only contributes to 6.84% of WA’s employment but it is the construction sector which really is part of our powerhouse at 11%.

With regards to the property sector, Colliers are still seeing positive signs in the medium to high density markets in comparison to outer ring residential homes.

And while the supply wave does look high in comparison to population growth, the reality is that not all these projects will proceed.

But despite all these market adjustments, property prices have still remained stable.

Current vacancy rates for residential properties is at 6% but with population growth declining as well as incomes, Colliers believes that we will now see an increase in renters which is ideal for the investor market.

And with three emerging groups within the property sector including baby boomers, young families and young singles, the next ten years will see a drive towards apartment living and typically in the CBD or on transport nodes.

Overall, Colliers believed that any oversupply would be absorbed over the next 18-24 months and at that point, buyers would begin to recognise that opportunities were limited and this would buoy the market once again.

As with all things cyclical, what goes down, ultimately will go back up and Colliers were confident that other eastern states property markets would also start to see adjustments in the next 12-18 months.

The key opportunities that the Colliers team identified were medium/high rise developments within 20kms of the city or located on transport nodes, which will also reflect a level of retail/mixed use and we are seeing this come to fruition with developments penned for Garden City, South Perth and Canning Bridge.

At the end of the day, the Perth market is stabilising and there are still opportunities to be realised. You just need to know where to look!

Is it really infill vs greenfields?

Samantha Reece recently MC’d the Future Directions event for the Property Council on the infill vs greenfields debate.

The event came hot on the heels of the Property Council’s Perth Design report which stated that infill only cost the State Government $50,000 while greenfields costs were closer to $150,000.

On the panel were a mix of greenfields and apartment developers as well as LGA representatives and as such the discussion became quite lively.

Certainly the greenfields developers rebuked Property Council’s statements re the cost of outer ring development and reinforced that often they are the ones that in fact incur the costs of infrastructure. They also felt that WA led the rest of the nation in terms of the calibre of communities and liveability.

On the other side of the fence, Mayor Brad Pettitt of Fremantle Council spoke of the need to accelerate infill in their CBD in order to sustain the businesses and restaurants, which suffered outside of the non-peak weekend periods.

Certainly Fremantle Council appears to have fully embraced infill (unlike other LGA’s) and their focus on delivering excellence rather than ordinary should be truly encouraged!

But Brad also acknowledged that homes in greenfields could also reflect sustainability principles and Josh Byrne’s home, which is 10 star rated and built for the same cost as an average home, is living proof of this principal.

Interestingly Brad raised the point that maybe we should rate homes with the same star rating as dish washers and fridges, and that this may be the starting point for raising awareness of the true costs of operating an unsustainable home.

However what became quite clear from the panel, was that choice was important.

While Psaros have made it their trademark to focus on sustainable apartments, the likes of Stockland and Cedar Woods are dealing with a variety of buyers and budget certainly is an influencing factor.

Hence both companies seek to have a variety of builders for their projects and while some residents may rate sustainability highly – others may not – and that is their prerogative.

There certainly was a feeling that State Government needs to play a stronger leadership role in championing infill and sustainability and once again Brad felt that if some Councils continued to advocate “the no change” status, that in fact they should be penalised by reduced allocation of State and Federal funding.

Overall there is a growing consciousness of the need to demonstrate best practice and while WA may be still behind the eight ball, times are a changing. Watch this space!

Many thanks to the panel Dr Brad Pettitt (Mayor Fremantle Council), Col Dutton (Stockland), Chiara Pacifici (Psaros) and John Silla (Cedar Woods).

Infill makes business cents

So we have been looking at examples of infill and the benefits its holds for small businesses and in particular service and retail.

This is especially so when we consider the increasing level of negativity that we are seeing in some Councils towards infill, as a result of resident’s action.

With the increasing proposals for density, there has been a corresponding increase in the number of action groups forming who are active, co-ordinated and aware of the approvals system (http://postnewspapers.com.au/editions/20150627/pdf/paper.pdf). While small in number, the fact that they are active, in comparison to the silent majority, means that they have had some sway with planning outcomes.

While examples in Australia were scarce, we did come across some great case studies in the USA (United States Environmental Protection Agency) which demonstrated the following:

A national analysis of office and retail properties found that on a 100 point scale, a 10 point increase in walkability was associated with a 9% increase in market value and a 7% higher net operating income.*
A study that classified 66 places within the Washington DC metro region found that a 19 point increase in walkability (out of 94 possible points) was associated with an 80% increase in retail sales and a nearly $7 per square foot increase in retail rents.**
Walkable places clustered near others in larger walkable districts performed better than more isolated walkable places. Gross retail rents in walkable districts were nearly 50% higher and retail sales were nearly 125% greater.***
In Livermore California, a $12.5 million streetscape project converted a four lane highway to a two lane pedestrian orientated main street. In the three years following completion of the project, downtown retail sales grew 15%.****

For smaller inner city centres such as Subiaco, it is quite evident that there is a need to generate a sense of activity and vibrancy to compete against upmarket retail centres such as Karrinyup.

With the loss of the Domain Stadium, Subiaco retail in particular, will experience a significant impact with the absence of this regular influx of visitors.

As a retail business there are a number of ways you can increase revenue, such as:

Increase your prices
Reduce your costs
Increase the number of people who visit your outlet

It just makes sense (cents) to us at PropertyESP, that by having an increase in population, you can provide a more consistent income base, especially when you see from our other research, that infill also tends to attract professionals with higher disposable income.

We have summarised this data into a strategy for the Property Council (as Samantha is Chair of the Infill Committee) and on that basis we are hoping to activate the business community to now start becoming vocal about the benefits of infill.

I hope that you will also join us in this worthy cause!

* Gary Pivo and Jeffrey D. Fisher, “The walkability premium in commercial real estate investments” Real Estate Economics: 1 MAR 2011

** Leinberger and Alfonzo

*** Leinberger and Alfonzo

**** Dono Andrea L “Livermore California: celebrating wine country” Main Street story of the week. National Trust for historic preservation 2009.

East Perth – part d’eux

So following on from last week’s post – let’s look at East Perth in a different light.

Over the 20 year study timeframe, we looked at the census data and saw some very positive correlations with the growth of apartment residences.

Starting with the population; we saw 9% growth between 2001 – 2006, which is good news, but then from 2006 – 2011 the population grew a whopping 42%.

We also saw a 9% increase in couple households and a significant decline in single households. There were also 15% more professionals in East Perth in 2011, then the Perth average and we have seen weekly household income levels treble.

This evolution of East Perth has now created a more sought after location with greater property returns, and this was a rejuvenation that definitely needed to happen.

60% of the population were also renting in the East Perth area in 2011 and overall the residents tended to have a relatively higher disposable income.

These kind of details are important considerations, as you can imagine, as they alter what retail experiences you may provide residents and what other key amenities you might need to add.

But it is certainly a good draw card for any business who is considering opening within an area of high density, as the numbers certainly add up!

It leads us to think, what other areas can we expect to see this kind of adjustment as a result of redevelopment? Northbridge? The Springs? I guess time will only tell……

At PropertyESP, we appreciate property and exploring what is being sold and how that is changing over time. We like to get behind the trends to see what people are buying and selling at the local level.

We share our knowledge with our clients so they can make informed decisions when developing, buying and selling property.