23/01/2020
https://www.watoday.com.au/national/western-australia/slow-motion-train-wreck-freo-locals-slam-city-s-free-rent-proposal-20200122-p53tr2.html
**Slaps Forehead**
The City of Fremantle's mismanagement of rate-payers monies continues with this proposed King's Square deal.
I know Tony Taylor (the possible tenant) personally - he owns the Bar Orient next door to where I live. (He isn't involved in the Fremantle Beach Backpackers as John Dowson claims.) Tony is a professional with many years in the hospitality industry. Kudos to him for negotiating the best deal possible for his future business - that's his job.
And Fremantle Property Services shouldn't be complaining about the Council poaching another tenant after Tony's many complaints regarding the Backpackers upstairs have fallen on FPS's deaf ears - no wonder Tony wants to leave his current space.
The responsibility for this financial mess again falls at the feet of the Council's officers.
Not just happy to undercut another potential landlord in regards leasing the top floor office space in the new Council building to the Rottnest Island Authority (conflict of interest Hannah Fitzhardinge?), or provide Victoria Hall rent-free so that Spacemarket can gobble up the small creatives market, the Council now puts forward this lease agreement, which breaks one of their own lease conditions - the business should come from those not already involved in Fremantle.
Andrew Sullivan, in a fine example of good old political doublespeak, both blamed a poor commercial market and said the Council needs to attempt to activate the precinct. It is the Council's mishandling of Fremantle's urban design challenges that has created the bad market and dead nighttime spaces - not visa versa.
Firstly, the Council should not have taken the risk with our money as they haven't the experience to understand the rental market in neither good nor bad times.
Secondly, without a sustainable residential population in Fremantle there will be a limit to visitor-focused businesses. Yet the Council fails to encourage people to move to the city. (Who wants to pay full commercial rates to live upstairs or behind in an existing commercial building?) The Council continues to focus its efforts on marketing Fremantle as a destination and not a place of residence. If they continue to flog this dead horse then the market will finally be saturated and it will become difficult to lease anything.
The Council needs to release numbers so rate-payers can judge this decision – real numbers not “hoped for” "best case" scenarios:
1. A pro rata land cost for the bar.
2. Construction costs for the shell of the bar – i.e. the Council’s construction financial responsibilities for the bar before the $500,000 fit-out sweetener.
3. Estimated maintenance costs per annum.
4. Insurance costs per annum.
5. Legal fees – construction contracts, lease negotiations, lease preparation (possibly).
6. Council officers costs.
7. Property management and other leasing agent fees.
8. Interest rate of loan repayments.
9. Any other costs incurred during the construction and as well as those ongoing.
A quick "back of the envelope" calculation based on the proposed rental agreement leaves rate-payers still paying off the bar after 20 years.
And where is the Fremantle Chamber of Commerce? Are they protecting small commercial property owners and the Fremantle community or blindly following the Council's poor policies yet again?
Finally, to me, the rental rates seem rather low – for a central CBD location – $200 per sqm for the upper floors ain’t great – we have had commercial real estate agents bandy this number around – and its been proven wrong. But when there is only one applicant for a space the Council is desperate to fill - hey - they are screaming to be ****ed!
[**Latest News - Andrew Sullivan admitted that the $200 per sqm for the upper floors is "not ideal"! Continuing he said, "Given the need to activate the square, I don't believe the City has the same luxury that many long term owners have in leaving their shop fronts empty... An empty space would also see the City lose the $155k (pa) of outgoings for this space." The Council has a different agenda to a private landlord - the CoF is trying to stem the chorus of "I told you so"s and not trying to maximise returns for the rate-payers.]
Fremantle locals have slammed a move by their council to offer three years of free rent and a fit-out worth half a million dollars to a prospective Kings Square tenant.