1 00:00:00,360 --> 00:00:02,760 Speaker 1: A new report by the Property Council of Australia has 2 00:00:02,759 --> 00:00:06,880 Speaker 1: revealed positive signs for the office markers in Darwin, CBD, 3 00:00:07,000 --> 00:00:10,320 Speaker 1: with vacancy rates dropping from fourteen point four percent to 4 00:00:10,400 --> 00:00:13,640 Speaker 1: eleven point eight percent over the last year. Now. The 5 00:00:13,680 --> 00:00:17,320 Speaker 1: report found that it has most mostly been driven by 6 00:00:17,360 --> 00:00:21,080 Speaker 1: the withdrawal of seven two hundred and ninety eight square 7 00:00:21,160 --> 00:00:24,400 Speaker 1: meters of office stock, with lower grades of space still 8 00:00:24,440 --> 00:00:27,840 Speaker 1: facing double digit vacancy rates. Now joining us in the 9 00:00:27,960 --> 00:00:30,560 Speaker 1: studio to shed a bit more light on the situation 10 00:00:30,680 --> 00:00:35,040 Speaker 1: is the Property Council's NT Chief Executive Executive Director. I 11 00:00:35,080 --> 00:00:37,400 Speaker 1: should say, Ruth Barber, good morning. 12 00:00:37,200 --> 00:00:38,120 Speaker 2: Good morning Katie. 13 00:00:38,120 --> 00:00:41,080 Speaker 3: I think my CEO gets anuways has a bit of 14 00:00:41,120 --> 00:00:43,760 Speaker 3: a giggle when US states get called the CEOs. 15 00:00:44,080 --> 00:00:47,960 Speaker 1: The executive director. Well, I was almost combining two titles 16 00:00:47,960 --> 00:00:49,720 Speaker 1: for you there, like I was giving you an extra 17 00:00:49,840 --> 00:00:53,519 Speaker 1: job this week. I'll take it now, Ruth, talk us 18 00:00:53,560 --> 00:00:57,560 Speaker 1: through what the drop in vacancy rates means for the 19 00:00:57,600 --> 00:00:58,360 Speaker 1: business sector. 20 00:00:58,680 --> 00:01:00,920 Speaker 3: Yeah, so, as you were saying Kate in the opening, 21 00:01:01,320 --> 00:01:03,200 Speaker 3: a lot of it is due to that withdrawal stock. 22 00:01:03,280 --> 00:01:05,920 Speaker 3: So what that means is basically if your building's being demolished. 23 00:01:06,240 --> 00:01:09,800 Speaker 3: So that then obviously takes away that vacancy. So you know, 24 00:01:09,840 --> 00:01:12,640 Speaker 3: we saw Palm Court recently demolished, so that was a 25 00:01:12,640 --> 00:01:15,080 Speaker 3: fair bit of space that then gets taken off the market. 26 00:01:15,319 --> 00:01:17,880 Speaker 3: You also see a shift in people moving around the 27 00:01:17,920 --> 00:01:21,240 Speaker 3: CBDs but also coming back into the city. So when 28 00:01:21,280 --> 00:01:24,600 Speaker 3: we historically would always be the highest sitting around that 29 00:01:24,680 --> 00:01:28,360 Speaker 3: twenty one percent eighteen percent, that was largely also due 30 00:01:28,360 --> 00:01:31,200 Speaker 3: to employees being drawn out of the city and we 31 00:01:31,240 --> 00:01:34,000 Speaker 3: saw health the health workers coming back into the CBD. 32 00:01:34,360 --> 00:01:36,640 Speaker 3: We've seen other workers coming back, but we've also have 33 00:01:36,760 --> 00:01:40,240 Speaker 3: seen new businesses coming in so large organizations that have 34 00:01:40,400 --> 00:01:41,920 Speaker 3: come to set up in Darwin. 35 00:01:42,000 --> 00:01:43,240 Speaker 2: That all makes a big difference. 36 00:01:43,240 --> 00:01:46,399 Speaker 3: But being such a small jurisdiction, any shift in the 37 00:01:46,480 --> 00:01:50,440 Speaker 3: numbers or any sort of movement does really sort of 38 00:01:50,720 --> 00:01:54,600 Speaker 3: take take that vacancy like percentage a huge way, like 39 00:01:54,600 --> 00:01:56,080 Speaker 3: because it is so small to begin with. 40 00:01:56,200 --> 00:01:58,360 Speaker 1: Oh absolutely, and then when you've got a whole building 41 00:01:58,480 --> 00:02:00,400 Speaker 1: like the one there at Palm Court coming off the 42 00:02:00,440 --> 00:02:03,680 Speaker 1: market or no longer being a vacant building, it would 43 00:02:03,760 --> 00:02:05,960 Speaker 1: make a huge difference to those numbers. 44 00:02:06,000 --> 00:02:08,239 Speaker 3: That's right, because it's you know, it's a multiple amount 45 00:02:08,280 --> 00:02:10,040 Speaker 3: of flaws that there need to be filled. 46 00:02:10,080 --> 00:02:13,120 Speaker 2: So and that was also a lower grade stock that 47 00:02:13,120 --> 00:02:13,840 Speaker 2: that had become. 48 00:02:13,960 --> 00:02:17,399 Speaker 3: So that's why we've now seen that drop in sort 49 00:02:17,440 --> 00:02:20,079 Speaker 3: of the B and C grade space that was historically 50 00:02:20,120 --> 00:02:23,239 Speaker 3: fifty eight percent vacant now down to about that forty percent. 51 00:02:23,600 --> 00:02:25,600 Speaker 3: But what we've got to look at is the premium 52 00:02:25,639 --> 00:02:28,360 Speaker 3: space is quite low for the vacancy, so we do 53 00:02:28,440 --> 00:02:30,720 Speaker 3: need to be looking at sort of those newer builds 54 00:02:30,720 --> 00:02:33,079 Speaker 3: and how we can sort of get more more builds 55 00:02:33,080 --> 00:02:35,400 Speaker 3: around the CBD, but also then what we do with 56 00:02:35,440 --> 00:02:36,480 Speaker 3: that existing stock. 57 00:02:36,639 --> 00:02:37,680 Speaker 2: So Ruth talk us. 58 00:02:37,600 --> 00:02:40,080 Speaker 1: Through you know the vacancy rates, I guess for the 59 00:02:40,200 --> 00:02:42,760 Speaker 1: different types of space. 60 00:02:43,400 --> 00:02:46,800 Speaker 3: Yeah, so across this is only for the Darwin CBD. 61 00:02:47,000 --> 00:02:49,360 Speaker 3: So we do grade our spaces for A grade, B 62 00:02:49,480 --> 00:02:51,600 Speaker 3: grade and C grade. So A grade is those new 63 00:02:51,600 --> 00:02:54,800 Speaker 3: builds or that premium build all buildings that have undergone 64 00:02:54,800 --> 00:02:57,760 Speaker 3: a significant refurbishment to take them up to code. So 65 00:02:58,080 --> 00:03:01,119 Speaker 3: the current code requirements at the moment will make your 66 00:03:01,280 --> 00:03:01,880 Speaker 3: building an. 67 00:03:01,760 --> 00:03:02,560 Speaker 2: A grade space. 68 00:03:02,800 --> 00:03:05,600 Speaker 3: So A grade is sitting typically around that five percent 69 00:03:05,720 --> 00:03:08,520 Speaker 3: now down from seven point five last year, and then 70 00:03:08,560 --> 00:03:11,280 Speaker 3: the B and C b's around twenty percent. We'd C 71 00:03:11,400 --> 00:03:14,720 Speaker 3: at forty one. So last year our C was fifty percent, 72 00:03:14,840 --> 00:03:16,920 Speaker 3: so we are seeing a bit of a shift, but 73 00:03:17,000 --> 00:03:20,240 Speaker 3: you know, through that demolishing of buildings, that's where that's 74 00:03:20,280 --> 00:03:22,440 Speaker 3: coming from. We have seen some referbs as well, so 75 00:03:22,480 --> 00:03:25,160 Speaker 3: that C or B grade space has now moved up 76 00:03:25,160 --> 00:03:27,320 Speaker 3: into that A grade. But that means that they've already 77 00:03:27,320 --> 00:03:31,080 Speaker 3: been filled, because people don't generally upgrade their buildings unless 78 00:03:31,120 --> 00:03:32,919 Speaker 3: they know they've got a tenant secured. 79 00:03:33,000 --> 00:03:34,880 Speaker 1: Well, that's the thing I mean, when you're talking about 80 00:03:34,960 --> 00:03:38,600 Speaker 1: massive office spaces as well as some instances floors of 81 00:03:38,600 --> 00:03:41,440 Speaker 1: office space, if you don't have a tenant for it, 82 00:03:41,480 --> 00:03:43,200 Speaker 1: you'd be hard pressed to be able to sort of 83 00:03:43,200 --> 00:03:46,840 Speaker 1: find the money I would suspect to make that investment 84 00:03:46,920 --> 00:03:48,560 Speaker 1: unless you know that you're actually going to have someone 85 00:03:48,600 --> 00:03:49,840 Speaker 1: moving in there and paying rent. 86 00:03:49,960 --> 00:03:50,680 Speaker 2: Yeah, and that's right. 87 00:03:50,680 --> 00:03:52,320 Speaker 3: And this is the issue that we're facing at the 88 00:03:52,360 --> 00:03:55,280 Speaker 3: moment with our older stock having to get up to code. 89 00:03:55,320 --> 00:03:58,680 Speaker 3: So the current code requirements, you know, there's the earthquake provisions, 90 00:03:58,760 --> 00:04:01,680 Speaker 3: there's the accessibility, there's energy efficiency. 91 00:04:01,880 --> 00:04:05,080 Speaker 2: That's all quite a large cost to a property owner. 92 00:04:05,320 --> 00:04:07,960 Speaker 3: So unless you do have that tenant, a good tenant, 93 00:04:07,960 --> 00:04:10,240 Speaker 3: that's you know that long term tenant secured, there's no 94 00:04:10,280 --> 00:04:13,040 Speaker 3: point upgrading, and so that's where we're now having the 95 00:04:13,160 --> 00:04:17,440 Speaker 3: conversation with the government around looking at the conversion into housing. 96 00:04:17,560 --> 00:04:24,440 Speaker 3: So whether it's accommodation for residentialccommodation, affordability, affordable housing, student accommodation. 97 00:04:24,839 --> 00:04:26,840 Speaker 3: We're sort of working with the government on that as 98 00:04:26,880 --> 00:04:29,760 Speaker 3: it was one of the Chief Minister's election commitments. So 99 00:04:29,800 --> 00:04:32,919 Speaker 3: I've met twice with them on providing advice around the 100 00:04:33,000 --> 00:04:35,599 Speaker 3: legislative and policy changes that could be implemented. 101 00:04:35,680 --> 00:04:37,719 Speaker 1: And so where is that sort of at. How soon 102 00:04:37,760 --> 00:04:40,120 Speaker 1: do you think we could start to see some of 103 00:04:40,160 --> 00:04:43,200 Speaker 1: those office spaces potentially converted into housing. 104 00:04:43,279 --> 00:04:45,600 Speaker 2: Yeah, I would expect to see it happening fairly quickly. 105 00:04:46,080 --> 00:04:49,000 Speaker 3: They have committed very for that turnaround to happen quite 106 00:04:49,080 --> 00:04:52,120 Speaker 3: quickly the government. We met with the government before December 107 00:04:52,160 --> 00:04:55,840 Speaker 3: and then again had to have our input and feedback 108 00:04:55,880 --> 00:04:58,920 Speaker 3: in by mid January, so we know that they do 109 00:04:58,960 --> 00:05:01,279 Speaker 3: want to move very quickly on this around how to 110 00:05:01,320 --> 00:05:03,479 Speaker 3: make it easier that you know, we're cutting that red tape. 111 00:05:03,560 --> 00:05:06,000 Speaker 3: The Chief Minister has put in that Razor Game task force, 112 00:05:06,040 --> 00:05:09,200 Speaker 3: headed up by former Chair of the Property Council Mark Garaway, 113 00:05:09,360 --> 00:05:11,560 Speaker 3: so they had a six months timeframe to cut that 114 00:05:11,600 --> 00:05:14,479 Speaker 3: red tape, so we could expect to see some of 115 00:05:14,480 --> 00:05:18,599 Speaker 3: these buildings redeveloped, you know, change of use quite quickly 116 00:05:18,680 --> 00:05:21,520 Speaker 3: if we can see some real sensible changes around legislation. 117 00:05:21,920 --> 00:05:22,760 Speaker 2: Now what else is. 118 00:05:22,680 --> 00:05:24,599 Speaker 1: The Property Council sort of doing off the back of 119 00:05:24,600 --> 00:05:27,040 Speaker 1: this report. I mean, obviously you do these reports so 120 00:05:27,080 --> 00:05:28,640 Speaker 1: you can get a bit of a better understanding of 121 00:05:28,640 --> 00:05:31,520 Speaker 1: how things are looking and I suppose what you might 122 00:05:31,600 --> 00:05:32,719 Speaker 1: plan for in the future. 123 00:05:32,960 --> 00:05:35,520 Speaker 3: Yeah, so at the moment we're sort of looking at 124 00:05:35,560 --> 00:05:38,479 Speaker 3: that change of use, but we're also looking at what 125 00:05:38,560 --> 00:05:41,719 Speaker 3: opportunities there are not only within the CBD but across 126 00:05:41,760 --> 00:05:44,600 Speaker 3: the whole Northern Territory. So in March we will have 127 00:05:44,680 --> 00:05:47,080 Speaker 3: our annual state of the State of the Market. So 128 00:05:47,200 --> 00:05:49,600 Speaker 3: this is an event that we run that looks at 129 00:05:49,800 --> 00:05:54,160 Speaker 3: not only commercial but residential, industrial and retail. So the vacancies, 130 00:05:54,240 --> 00:05:57,320 Speaker 3: what's happening, what's happening in the future where we're currently sitting. 131 00:05:57,920 --> 00:05:59,680 Speaker 3: But this year we're also taking it down the track 132 00:05:59,720 --> 00:06:02,200 Speaker 3: to Allie, so we haven't done an event down there, 133 00:06:02,400 --> 00:06:04,119 Speaker 3: so we really want to make sure that the Alice 134 00:06:04,120 --> 00:06:07,480 Speaker 3: Springs residents, the local businesses down there have a really 135 00:06:07,520 --> 00:06:09,599 Speaker 3: good understanding of what's happening in their market. 136 00:06:09,760 --> 00:06:11,760 Speaker 1: Yeah, how are they going at the moment. 137 00:06:12,000 --> 00:06:14,240 Speaker 3: Yeah, So commercially, I mean, we have seen a lot 138 00:06:14,279 --> 00:06:16,760 Speaker 3: of businesses closing their doors, so we really want to 139 00:06:16,800 --> 00:06:19,320 Speaker 3: go down and give them some support. But residentially, we 140 00:06:19,360 --> 00:06:22,480 Speaker 3: know that their housing has like their sale prices are 141 00:06:22,560 --> 00:06:25,200 Speaker 3: double what they used to be, around double what's on 142 00:06:25,279 --> 00:06:29,119 Speaker 3: the market, So not talking about price, so people wanting 143 00:06:29,160 --> 00:06:32,560 Speaker 3: to leave Alice Springs, but unfortunately they can't sell their properties. 144 00:06:32,600 --> 00:06:35,040 Speaker 3: One they bought out a high price and with the 145 00:06:35,040 --> 00:06:38,440 Speaker 3: crime and the issues and economics the economy that has 146 00:06:38,480 --> 00:06:41,000 Speaker 3: sort of stalled down there, the prices have come down, 147 00:06:41,040 --> 00:06:44,360 Speaker 3: so people are struggling to sell their properties. So historically 148 00:06:44,440 --> 00:06:47,080 Speaker 3: it'd sitted around that one hundred homes vacant. We're now 149 00:06:47,120 --> 00:06:49,240 Speaker 3: sort of double that down there. So really want to 150 00:06:49,279 --> 00:06:51,119 Speaker 3: go down there and paint a picture for those guys 151 00:06:51,120 --> 00:06:52,279 Speaker 3: and sort of show them. 152 00:06:52,120 --> 00:06:53,400 Speaker 2: What opportunities they could be. 153 00:06:53,520 --> 00:06:56,520 Speaker 3: But what's happening across all all their industry sectors down 154 00:06:56,560 --> 00:06:57,320 Speaker 3: there well. 155 00:06:57,400 --> 00:07:01,400 Speaker 1: Ruth Palmer, the NT's executive director for the Property Council 156 00:07:01,440 --> 00:07:03,680 Speaker 1: of Australia. Always good to catch up with you. Thanks 157 00:07:03,680 --> 00:07:05,120 Speaker 1: so much for joining us in the studio. 158 00:07:05,279 --> 00:07:07,359 Speaker 2: Excellent. Thanks a lot, Katie, thank you.