Cutting edge Internet Property Marketing

Clearpoint proves again to be at the cutting edge of Internet Property Marketing with front page Google search results for key search term “retail for lease”.

Clearpoint utilises several “feeder” blog sites such as retail-space-for-lease.com.au to drive enquiry to property listings on our main website clearpoint.com.au .

To find a tenant for your shop for rent or office space, or create renewed interest in an already vacant shop, call Clearpoint today on 1300 325 327.

Mobile Phones and Property

realestateVIEW.com.au recently conducted research into mobile usage for property searches.
More than 2000 people participated. The research showed 40 per cent of people used their mobile as a primary or secondary device to search for property.
The most important thing consumers wanted was easy access to an agent’s contact details.

Market Update Feb 2012

Time to re-think the retail mould?

Flexibility in retail layouts is the key to a successful retailer growth strategy, especially in a mature market like Australia.

Where growth is no longer driven by rapid development of new shopping centres, growth may only be possible by breaking the mould and looking at previously ignored real estate opportunities like factory outlet centres, mixed use developments, university campuses, and urban in-fills.

There are many examples of retailers that have become good at adopting flexible formats to suit local sites and conditions, such as US department stores Bloomingdale’s and Walmart.

Walmart has developed a slew of customised formats for every occasion, from 18,000 sqm freestanding supercentres at one end to 1,000 sqm edited food stores at the other. This year it also came up with a 325 sqm concept for university campuses which includes a pharmacy and licensed apparel.

For small retailers in Australia who are frozen out of shopping centres, opportunities exist for expansion both at home and overseas.

Food for thought when seeking your next investment opportunity or setting up a new retail outlet.

Drawn from “Formats Outside the Comfort Zone” by Michael Baker. Full article at Michael’s excellent blog HERE.

Purchase of Australian Commercial Real Estate by “Foreign Persons”

Article by Maria Ho, Norman Waterhouse

Commercial real estate includes vacant and developed property which is not for residential purposes. A foreign person wishing to purchase commercial real estate in Australia needs to be aware that certain restrictions may apply.

Foreign Person

‘Foreign Person’ is defined under Section 5 of the Foreign Acquisitions and Takeover Act 1975 (Cth) to mean ‘a natural person not ordinarily resident in Australia’. However, the definition also includes:

• a corporation in which one or more ‘foreign persons’ or a foreign corporation hold a controlling interest;
• the trustee of a trust estate in which a ‘foreign person’ or a foreign corporation holds a substantial interest;
• the trustee of a trust estate in which two or more ‘foreign persons’ or a foreign corporation holds an aggregate substantial interest.

A person is considered to hold a ‘substantial interest’ if that person controls 15% or more of voting power or holds a 15% or more interest in a corporation. Two or more persons are taken to hold an ‘aggregate substantial interest’ if they together control 40% or more of the voting power or hold a 40% or more interest in a corporation. Either a substantial interest or an aggregate substantial interest is taken to be a ‘controlling interest’.

Developed Commercial Real Estate

Developed commercial real estate includes offices, warehouses, factories, restaurants, shops, hotels, motels, hostels, guesthouses and any individual dwellings within those properties. A foreign person is not required to seek approval from the Foreign Investment Review Board (FIRB) if the developed commercial property to be purchased is valued below the applicable monetary threshold set out in Australia’s Foreign Investment Policy (Policy).

Under the Policy, the monetary threshold for foreign persons acquiring developed commercial properties as at 1 January 2011 is A$50 million. The threshold is A$5 million if the property is heritage listed.

Monetary threshold for United States investors acquiring developed commercial properties as at 1 January 2011 is A$1005 million.

Foreign persons are permitted to purchase developed commercial properties valued above the monetary threshold if approved by FIRB. FIRB will normally grant approval for the purchase unless the approval is deemed to be contrary to the national interest.

Commercial Real Estate For Development

Foreign persons acquiring vacant properties for commercial development must obtain approval from FIRB regardless of the purchase value. FIRB will normally approve the development subject to the following conditions:

• continuous construction commencing within five years; and
• a minimum amount equivalent to 50% of the acquisition cost or current market value of the land (whichever is higher) being spent on development.

Exemptions

An Australian citizen or permanent resident living overseas is exempt from applying to FIRB for approval to purchase commercial real estate.

Regardless of the foreign person’s citizenship or residency, FIRB approval is not required if the person is acquiring property by will or by operation of law (such as a court order regarding the division of property in a divorce settlement).

No approval will be required for acquisition of property from the Commonwealth, State or Territory or a local government, or a statutory corporation formed for a public purpose.

A foreign person is not required to obtain approval for purchasing developed commercial real estate where the property is to be used immediately, in its present state, for industrial or non-residential purposes. The acquisition must be wholly incidental to purchaser’s proposed or existing business activities.

Overhaul of AH SEPP, effective immediately

Article by Anthony Whealy and Isabella Ferguson, Gadens Lawyers

The Affordable Rental Housing SEPP was introduced in July 2009 to facilitate new affordable rental housing by providing a range of incentives to encourage developers to build new developments, of which at least 20% of units would be affordable rental housing, managed by not-for-profit community housing providers for a period of time (10 years).The general incentive provided was increased density/floor space being allowed.

The SEPP has been reviewed over a number of recent months, culminating in it being battered and bruised by significant amendments announced on 20 May 2011. In public announcements made that day, Planning Minister Brad Hazzard took aim at the SEPP and did not miss, labelling the SEPP as a ‘a cash cow’ allowing ‘small time developers to rip into local communities and change their entire face’, and referred to ‘the butchery committed on communities’ by the SEPP.

Although Mr Hazzard’s statement says that the State Government has ‘stopped all new private development applications’ under the SEPP (a claim also incorrectly reported by all major newspapers), the SEPP has not in fact been stopped. Rather, it has been amended, and now continues to operate, but in its amended form.

The key changes to the SEPP are:

• For dual occupancies, multi dwelling housing, or residential flat buildings, the SEPP is now only available if the particular development is already permissible on the land (under another LEP or SEPP). Previously the SEPP allowed these developments in all residential zones, but 20% of the dwellings had to be used for affordable housing in zones where the DA was already permissible, and 50% of the dwellings /units had to be used for affordable housing in zones where the DA would otherwise have been prohibited. As the latter category is no longer available, only the 20% minimum requirement remains.
• The requirement that 20% of the number of dwellings be provided as affordable housing allowed developers to build for example 20% of units as small as 1 bedders to satisfy the affordable housing component, and build the other 80% as much larger 2 bedders or 3 bedders which would not be provided as affordable housing. This loophole is fixed by requiring 20% of the total gross floor area to now be provided as affordable housing
• Where such DAs are permissible, the amended SEPP does still provide floor space ratio (FSR) bonuses (otherwise why use the SEPP at all?). These bonuses remain unchanged from the unamended SEPP. The extent of the bonus floor space depends on the amount/component of affordable housing provided, but generally the FSR bonus will be between 0.2:1 and 0.5:1.
• Where such DAs are lodged, seeking to achieve additional FSR as contemplated by the SEPP, a new ‘character’ test applies, whereby the consent authority must consider ‘whether the design of the development is compatible with the character of the local area’. Much information released by the Department misstates this requirement as one whereby the development must actually be compatible. However, the true position is that this is only one matter that must be considered and weighed up as against all other relevant matters for consideration. A development might not be compatible with the character of a local area, but might nevertheless warrant approval for other reasons.
• More problematic though is interpreting what is meant by ‘the local area’ – where does it start and where does it finish? Media releases, fact sheets, circulars, and website statements released by the Department on 20 May all either use different terminology altogether (such as ‘the surroundings’ ‘the neighbourhood’ ‘the locality’ or ‘the area’) or are silent on what the concept of ‘the local area’ captures. It seems to us that as a matter of legal interpretation, the term has to be construed broadly to give effect to the aims and objectives of the SEPP, which are to facilitate, rather than to restrict, affordable housing. As such, the ‘local area’ would be a large area comprising at least a number of blocks, rather than looking at a development by reference to the buildings immediately adjacent to it or only within the same streetscape. If there are other large buildings within the broader ‘local area’, then the proposal may well be compatible with the character of that local area. This view would be supported by the Department’s December 2010 Discussion Paper, which suggests an analysis of ‘streets and blocks’ should be required.
• Tougher parking requirements now apply. Previously the requirement was 0.5 spaces per dwelling. Now the SEPP requirements are dependant on room numbers per dwelling. The 0.5 spaces continues to apply to 1 bedroom dwellings, but this doubles for 2 bedders and triples for 3 bedders.
• The requirement that DAs relying on the SEPP (to obtain bonus FSR) be located within certain distances from accessible public transport facilities – for example 400m from a regular bus stop, or 800m to a railway station or wharf, are largely retained in identical form. The difference here is that the bus stops must also be ones that are used until later at night (9pm weekdays rather than 6pm) and now also on weekends.
• No changes were made to the SEPP in relation to granny flats (secondary dwellings);
• In relation to boarding houses, these are permissible in many zones but within low density zones, they are permissible only when they are within specified distances from regular public transport facilities. Parking requirements also effectively double in low density zones, but are still reasonably low, for example 2 spaces are required for a 10 room boarding house. In other areas, away from accessible public transport facilities, a 10 room boarding house would require 4 spaces. The new “character” test described above also applies to boarding hose DAs.
• Savings provisions are provided for pending DAs that have already been lodged. However the savings provisions are somewhat harsh in that those applications, which have already been designed and may be well into their DA assessment, will now be subject to the consideration of whether their design is compatible with the character of the local area. In addition, the requirement that they provide at least 20% of total “gross floor area” (rather than the old requirement for 20% of total dwellings), will apply to those pending applications.
• The Government has also announced that it now intends to review the SEPP entirely with a view to producing a new affordable housing SEPP. Surprisingly though, the Department will be working with councils to develop their own affordable housing strategies which, if satisfactory, will enable those councils to be exempted from the new SEPP altogether. This could see a return to a piecemeal, council by council approach to the State’s affordable housing crisis. Or, more likely, a process of forcing all developers to pay for new affordable housing by way of mandatory levies whenever they carry out any new development of any kind.

Conclusion

There can be little doubt that NSW is experiencing a genuine rental crisis. Market forces of supply and demand almost certainly guarantee that with less rentals available, rental prices will continue to increase, intensifying the shortfall in ‘affordable’ rental housing. The demand for rental housing in NSW is predicted to increase by 80% by 2045. There can be no doubt that NSW faces a genuine housing affordability crisis.

Previously the AH SEPP had the potential to go some way to increasing the stock of affordable rental housing in NSW. Whether it went far enough was highly doubtful. The amendments to the AH SEPP, announced on 20 May 2011, while certainly a win for local councils and local communities, will make it less likely that the private sector will choose to contribute towards the construction of new affordable housing stock in NSW, other than perhaps on a very small scale by way of the retained ‘granny flat’ provisions of the AH SEPP.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

New lessor disclosure statements and amendments to retail leasing legislation

Article by Mary Digiglio, Swaab Attorneys

Retail landlords now have new disclosure obligations and also need to be aware of proposed changes under the Retail Leases Amendment Bill (2011).

New disclosure obligations for retail landlords

As from 1 January 2011, a new form of landlord disclosure statement was introduced across the eastern seaboard states. This new form of disclosure statement must now be provided for all retail leases entered into on or after 1 January 2011. It requires landlords to include more detailed information not previously required. A template of the new form of landlord disclosure statement can be downloaded from the website of NSW Fair Trading.

Retail Leases Amendment Bill 2011

On 10 January 2011, the NSW Government released an exposure draft of the Retail Leases Amendment Bill 2011. If enacted in its current form, it would result in a number of significant changes to landlords’ responsibilities in retail lease matters. The Bill is intended to address a number of criticisms of the Retail Leases Act 1994 (NSW) and correct what is perceived as a power imbalance between larger landlords and small retail tenants.

A summary of the key proposed changes is set out below.

Further disclosure requirements for the landlord (s11)

The tenant may require the landlord to provide an updated disclosure statement before the tenant exercises an option for a further term.

Undisclosed outgoings (s12)

The tenant will not be required to contribute to outgoings that are not disclosed in the disclosure statement. This poses a challenge for landlords of new shopping centres, who may not be aware of all of the outgoings likely to be incurred over the life of the lease at the time of issuing the disclosure statement.

Mandatory registration of retail shop lease (s15)

Retail leases of three years or more will be required to be registered on the title of the premises or building in which the premises are located. A summary statement will need to be prepared and included. This is intended to make comparable lease information publicly available to tenants, who will then be able to obtain details of other registered leases.

Claiming on bank guarantees (s16)

The Director General will be entitled to publish guidelines in relation to the claiming on bank guarantees held by the landlord as security for the tenant complying with its obligations under the lease.

Prohibition of passing land tax on to tenants (s26)

To bring NSW in line with the retail provisions in relation to land tax in Victoria and Queensland, the landlord will be prohibited from passing on land tax to the tenant as a recoverable outgoing.

Increased notice period (s33)

The current requirement for the landlord to give the tenant two months’ notice of any alteration or refurbishment that may adversely affect the tenant’s business will be increased to six months.

Relocation of the tenant (s34A)

In the event that the landlord invokes the relocation clause, alternative premises which are offered to the tenant must be of reasonable comparable commercial value to the existing premises leased by the tenant. If the landlord does not offer appropriate premises and the tenant terminates the lease, the tenant is entitled to claim depreciated fit out costs from the landlord as compensation.

Demolition (s35)

The landlord cannot require a tenant to make any repairs or improvements after the landlord has given the tenant a notice of termination on grounds of demolition.

Promotion levy (s56)

The tenant is entitled to a refund of contributions towards shopping centre advertising and promotion that remains unspent at the end of the lease.

Administrative Decisions Tribunal (ADT, s73)

The monetary limit of the ADT will increase to $750,000 (from $400,000).

Summary – Future of the Retail Leases Amendment Bill is currently unclear

The Bill is only in draft form and significant amendments could be made to it before it is enacted. It is also possible that opposition to the Bill will prevent it from being enacted altogether.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Introducing Tina Young Clearpoint Leasing Exec

Clearpoint welcomes Tina Young as Leasing Executive to our team.

Tina has come to us from the media industry bringing a wealth of experience managing all levels of the business, from national accounts to smaller local clients.

Tina attributes her career success to “dedication and a positive approach to each and every client and situation”.

With multi-level sales, customer service and marketing skills, a talent for understanding client needs, and a fresh approach to commercial real estate, Tina will be a valuable asset to both the team and your property.

Clearpoint is Expanding (again)

Clearpoint welcomes our new Executive Property Manager, Amy Sader, to the team.

Amy has 17 years industry experience and has worked in all aspects of Property Management, ultimately overseeing a management Portfolio of 850 properties.

Personable, efficient, and with a critical eye for detail, Amy believes that every single person – landlords, contractors, tenants and staff alike – should receive the best possible service.

Amy’s highly motivated and passionate commitment to this ideal is a breath of fresh air in the industry and an exciting addition to the Clearpoint Management team.

Australia: New Uniform Landlord Disclosure Statement for Retail Tenancies

03 March 2011

Article by Corinne Attard, HBL Ebsworth

Introduction
On 1 January 2011, New South Wales, Queensland and Victoria jointly adopted a new national harmonised landlord disclosure statement. This move was the result of a Federal Government initiative to enhance consistency of the retail tenancy regulatory framework and harmonise retail shop disclosure requirements.

The new disclosure statement is also designed to help tenants make more informed decisions, by requiring landlords to provide more information about the tenant’s rights and obligations under the prospective retail shop lease.

The new form must also be used by franchisors who hold the head lease and are proposing to sublease or licence the premises to their franchisee. In most states a “licence to occupy” falls within the definition of a retail lease.

To standardise the retail leasing legislation in each State, amendments have been made to the Retail Leases Act 1994 (NSW), the Retail Shop Leases Regulation 2006 (Qld) and the Retail Leases Regulations 2003 (Vic). The new forms are practically identical except for minor legislative differences between the States and minor variations in the guidance commentary.

No changes have been made to the forms of disclosure statements to be provided by lessees, assignees and assignors.

Implications
For retail leases (as defined) that are entered into or renewed on or after 1 January 2011, the new form of disclosure statement must be provided to tenants (including franchisees).

If a landlord (or franchisor) does not use the correct form of disclosure statement, the statement is arguably incomplete and may even be misleading and deceptive as it does not contain the prescribed disclosure. In New South Wales and Queensland, the tenant is then entitled to terminate the lease by giving written notice to the landlord within 6 months after the lease is entered into. In Victoria, the tenant may give the landlord a written notice of termination within 28 days after the latter of receiving the disclosure statement, receiving the proposed lease and entering into the lease.

Tenants however must be cautious not to terminate the lease on the ground that the disclosure statement is defective if the landlord acted honestly and reasonably and ought reasonably to be excused and the tenant is in fact in substantially as good a position as it would have been if the failure had not occurred.

Main changes
The amendments made to the previous New South Wales and Victorian forms are not substantial as the previous disclosure statements for those two States were already comprehensive. However substantial amendments were made to the Queensland disclosure statement.

Generally, landlords are now required to disclose the following additional information:

• Premises
  List of structures, fixtures, plant and equipment in the premises, to be provided by the landlord * Plan of premises (if available) * Copy of head lease or Crown lease (if applicable)

• Works, fit out and refurbishment
  Details of any requirements the tenant must comply with relating to the quality or standard of the shopfront or fitout * Whether the landlord will be contributing to the cost of the tenant’s fitout

• Rent, outgoings, other costs
  Whether there are any rent free and outgoing free periods * Additional information on outgoings payable such as body corporate levies, building intelligence services, caretaking and fire levies * Details of any costs arising under the lease that are not referred to elsewhere in the disclosure statement, such as interest and legal costs

• Alteration works
  Details of any alteration works, planned or known to landlord during the term or any further terms of the lease * Clauses in the lease dealing with relocation and demolition works

• Retail shopping centre
  List of all major and anchor tenants (such as department stores, discount department stores, supermarkets) and dates on which the leases held by those tenants expire * Whether the landlord will assure the tenant that the current tenancy mix in the shopping centre will not be altered by the introduction of a competitor * Floor plan, customer traffic flow statistics (where collected) and a copy of any casual mall licensing policy

• Other disclosures
  Details of any current legal proceeding in relation to the lawful use of the leased premises * Details of any other oral or written representations made by the landlord or landlord’s agent

In addition to the above disclosures, the new disclosure statement contains warnings to the tenant to consider issues such as:

• Whether the premises comply with building and safety regulations
• Whether the premises are affected by outstanding notices by any authority
• Whether the relevant planning authority allows the proposed use for the premises under planning law.

This is especially important for premises that are stand-alone sites or are not in existing retail shopping centres.

Links
The new disclosure statements can be accessed on following websites:

NSW: http://www.fairtrading.nsw.gov.au/docs/About_us/Forms/Lessors_disclosure_statement_Jan_2011.pdf

QLD: http://www.justice.qld.gov.au/__data/assets/pdf_file/0009/18693/lessor_disclosure_statement.pdf

VIC: http://www.sbc.vic.gov.au/images/stories/VSBC_Retail_Leases_Amendment_Regulations_2010.doc

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Affordable Housing SEPP 2009 Floor Space Ratio Increases and FSR Bonus

The NSW Government has made it easier and more attractive to invest in affordable housing projects with the creation of the Affordable Rental Housing State Environmental Planning Policy (SEPP) to help increase the amount and diversity of affordable housing in NSW.

This policy encourages immediate new investment in affordable housing by:

• Providing a significant floor space bonus for projects that include affordable housing.
• Providing an increased minimum floor space standard of 0.75:1 for affordable housing projects that are constructed over the next two years in response to weaker economic conditions.
• Setting clear standards for developing new affordable housing projects.

One of the key incentives of the Affordable Rental Housing SEPP involves the increase of floorspace ratios for properties that provide affordable rental units. This will allow the affordable housing project ratios to have greater floor space than would normally be permitted if there is a commitment to use part of the development for affordable rental housing for at least ten years.

Q: What is floor space ratio (FSR)? The total floorspace area of a proposed building in relation to the land area it is built upon. It is the key factor used to work out how many units can be built on a site.

There are two floor space incentives available under the Policy:

• A minimum FSR standard for low rise affordable housing projects; and
• A FSR bonus for affordable flats in areas already zoned for flats.

Within the Sydney Metropolitan Region, these provisions only apply to developments that are accessible by public transport.

The floor space standard applies to all low-rise affordable housing developments – such as dual occupancies, villas, townhouses and residential flat buildings up to 8.5 metres in height. If the development does not exceed this FSR standard, then the consent authority cannot refuse the application on the grounds of density and scale of development.

The FSR bonus is available for residential flats containing affordable units, but only in areas already zoned for flats. The bonus is 0.5:1 (or20%, whichever is greater) on top of the existing maximum FSR allowed by the existing local planning controls. The minimum amount of affordable housing a provider must offer in order to be granted bonus floorspace is 20 percent of the total dwellings.

For full details of the Affordable Housing SEPP 2009 see http://www.planning.nsw.gov.au/affordablehousing

Rhys Donnellan, Clearpoint