Simple solution to building upgrades and rising vacancies
The WA property industry is calling on the State government to permit Building Upgrade Agreements to help combat Perth’s rising office vacancy rates, through changes to the Local Government Act.
The agreements, introduced in South Australia, New South Wales and Queensland to combat high vacancies, will be of considerable assistance to commercial building owners and tenants looking to maintain the relevance of older grade commercial buildings by accessing loans to retrofit their buildings. Importantly, this scheme will also lead to a more sustainable built environment.
“Changes would need to be made to the Local Government Act to allow councils to enter into building upgrade agreements to be put in place,” Property Council WA Executive Director Lino Iacomella said.
Building upgrade finance is a voluntary mechanism to assist building owners upgrading commercial buildings to improve environmental efficiency through more efficient energy and water use. Loans are tied to a property rather than a property owner and local repayments are collected by a council levy.
“Building upgrade 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.
“Older building must find a way to compete with new stock on the market, and an environmental upgrade will certainly boost a building’s attractiveness to tenants.
“Building upgrades can reduce operating costs, increase yields, help attract and retain tenants and improve asset values – this scheme makes sense for building owners, but also for tenants. Benefits for tenants include improved indoor amenity, staff productivity, and in many cases a net reduction in operating costs.
“This mechanism is suitable for building owners and occupiers as a means of managing utility costs, and for businesses that can provide the clean technologies and solutions that lift building performance.
“Combating Perth’s high commercial office vacancies will require a suite of solutions, including the use of building upgrade agreements.”
Media contact: Lino Iacomella | M 0417 501 974 | E [email protected]