Newspaper House, Perth, gets a colourful makeover

Notice the rising tide of thinking that new buildings are … maybe necessary at times, but that it’s the upgrade of our existing structures that will be increasingly valued? Especially as climate change makes us increasingly hot under the collar, likewise the diminishing state of the natural resources we need to construct them.

Now from Perth comes news that the state government is being encouraged to follow the example of other Australian dominions in creating building upgrade schemes to help breathe new life into the CBDs.

Pushing this agenda this week was the WA Property Council, which pointed to the potential for building upgrade finance schemes to “act as an incentive for the improvement or re-adaption of ageing buildings and address the emerging problem of rapidly deteriorating older commercial buildings in the CBD”.

Building upgrade finance schemes or Environmental Upgrade Agreements (EUAs) provide loans for environmental upgrades to buildings and are repaid through council rates.

“Importantly, this scheme will also lead to a more sustainable built environment,” the Property Council said in a media statement.

Adding grist to the sustainability mill was the state of the market with skyrocketing vacancy levels making it seem like a spot of madness to  even consider adding to the surfeit of new space, except that some tenants, of course, will have it no other way. Sadly.

Lino Iacomella

Property Council WA executive director Lino Iacomella didn’t beat around the bush.

“With the Perth CBD office market vacancy at its highest level in over 20 years (21.8 per cent), smart strategic policy is needed to ignite a genuine CBD revival,” he said.

“Building upgrade finance schemes should be the first such policy as it will support the upgrade and reinvention of older buildings so that they are better equipped to attract new tenants and compete with new stock on the market.

“These schemes overcome the ‘split-incentive’ barrier in leased buildings where a tenant enjoys the benefits of reduced utility costs yet the building owner has to wear the cost of capital improvements.

“Building upgrades can reduce operating costs, increase yields and improve asset values while providing excellent benefits for tenants such as improved amenity and a better working environment.”

And of course it’s election time again in WA, so perhaps some pressure could be applied to the folk under the hammer to bring in some form of EUA legislation in catch up with Victoria, South Australia, Queensland and NSW.

The property industry was calling on the winner of next year’s state election to commit to changing the Local Government Act to allow councils to enter into building upgrade agreements, Mr Iacomella said.