There’s another way to invest in property that can provide office space and housing in an ethical and sustainable way.
Since 2013, Ethical Property Australia has been providing co-location workspaces for social enterprises and not for profit organisations but now the B Corp-certified business wants to put its ethical spin on other asset types.
The concept behind Ethical Property was dreamt up in the UK in 1998. The vision, at its simplest, is to provide environmentally sustainable and affordable workspaces for tenants in the for-purpose space.
If it sounds like a precursor to co-working, albeit a more ethical version, that wouldn’t be completely off the mark.
Ethical Property Australia’s founding chief executive officer and now chief development officer, Peter Allen, says that the company “got ahead of the market in that sense” but assures The Fifth Estate that the model is about more than just flexible workspace.
“It’s also about the community that forms from being co-located with other like-minded groups.”
A triple bottom line approach to commercial property
This version of co-location helps for-purpose organisations to grow and thrive. But other companies can also co-locate. To qualify for a spot, they simply need to “communicate to us what their impact is,” Allen says.
This recognises that most people “want to see the world a better place”.
Critically, the buildings are “completely self-sustaining”.
Instead of subsidised but insecure rental spaces, or short term donations that might not be repeated and make it hard for these organisations to thrive, the spaces in this model “fall within the normal parameters of commercial property”.
Rents are not subsidised, and investors aren’t expected to donate their money, Allen says.
How it works
“To have an impact on the sector we needed to make it financially sustainable.
“There’s no reason why you can’t both make money and do good.”
To make this work, the spaces and amenities are carefully optimised. For example, if a business only uses a meeting room once a week, they might share it with other startups.
Tenants also end up with a better deal on services, such as internet connection, by sharing it with others and energy efficiency across all sites also mean bills are lower and space use is optimised.
Allen says this means most tenants end up with a great workspace at a price they can afford.
How it all started
After making its mark in the UK and parts of Europe over the course of a decade, the company selected Australia as its next destination.
Ethical Property Australia was founded in 2013 as a partnership between Melbourne-based charity donkey wheel Trust and UK-based The Ethical Property Company, with Allen, who has a background in environmental architecture, at the helm.
The Australian company’s first site was donkey wheel house, near Southern Cross Station in Melbourne’s CBD, which the company took over from donkey wheel trust in 2014. It’s since been refurbished and populated with for purpose businesses and not-for-profits.
The five-person team has since acquired another property in South Melbourne, and another in Canberra.
It’s also set up and manages the Ethical Property Commercial Fund, a unit trust that owns the properties and raises capital for new projects.
The future looks… ambitious
Ethical Property Australia chief executive officer Adam Trevaskus joined the company in 2018 to help take it to the next stage.
His plan is to build on the company’s foundations and ethos – to use “property as a platform for change” – by diversifying into aligned asset categories.
One of those is the “impact campus” – buildings that bring public, private and not-for-profit partners together under one roof to solve the tough problems facing society. There’s currently one such facility planned for Geelong, which will house a Social Innovation Lab, bringing together community organisations, government, academia and business to solve the “really tricky” social problems.
Residential also on the cards
The company is also eyeing off mixed use developments by partnering with affordable housing and disability accommodation providers to create “impact neighbourhoods”.
The plan is to create community assets that delivers affordable housing and appropriate accommodation for people with disabilities, together with office and retail space to deliver community services, while still offering investors a decent return.
To lower the risk to the developer, two or three entities purchase an asset. Housing providers would own the accommodation while the Ethical Property fund retains the commercial spaces, renting them out.
This keeps “skin in the game” and avoids the typical practice of taking a margin and walking away.
Trevaskus says this will continuously add value by “reflecting the voice of the community in the way we run the asset”.
“It’s a lower risk model that aligns with what councils are trying to achieve, addressing issues around affordability and inclusivity, and getting a return.”
The returns might not be as “aggressive as building student housing, say” but this is about moving towards a triple bottom line property model, he says.