High price for being cool

By Rhonda Dredge

A tour group has just arrived in the Cathedral Arcade to admire the inspiring glass ceiling. 

The group could belong to any of 15 companies guiding visitors through the city’s arcades. Some companies take three groups a day, so that’s a lot of people attracted to this particular cultural site.

Above the arcade is the 10-storey Nicholas Building, an equally famous site for those who pine to work in a creative environment with cheap rents, original features and friendly tenants. There are poetry readings on a weekly basis, art openings and chats in the lifts with a diverse range of artisans and directors of bespoke companies.

On February 3 notices went out to the owners of buildings in Swanston St informing them that their properties would be compulsorily acquired for the Metro Tunnel project.

Although the Nicholas Building will not be acquired owing to its heritage listing, a three-storey annexe next door will soon become a 35-metre deep gaping hole, according to advice to tenants from Metro Rail.

Heritage groups recommended to an independent environmental hearing last year that the annexe, at 27-29 Swanston St, be preserved to protect the integrity of the Nicholas Building. Businesses along the south of the building will be vulnerable. These include galleries, architectural firms and an acting academy Aescetica, which is located within the annexe.

At this stage tenants are not sure how the project will impact their businesses in actual day-to-day terms, other than the noise and dust generated by the demolition, said Fiona Sweetman, director of Hidden Secrets Tours.

Ms Sweetman said: “We are still uncertain if we will have to move office, or change tour itineraries.”

Hidden Secrets Tours is a walking tour business that has been a tenant of the Nicholas Building since 2006. The company takes small groups of up to eight people around the CBD.

Ms Sweetman is passionate about the building. “Many say the cultural value of the Nicholas Building is its tenants, and the longevity of these manually creative businesses,” she said.

Ms Sweetman and other tenants have formed a group to sift through the facts of the situation. There are two major issues for tenants – the impact of the tunnel project which will involve a year of demolition, two years of excavation and a possible five years of construction – and the tactics of the building’s agents, Allard Shelton.

The first meeting of the group was told that 10 tenants have had rent increases since the tunnel project was announced a year ago, with three forced to decide by this month if they are prepared to pay almost double. B-Grade office space without hot and cold water and air-conditioning commands about $22 a square metre. Calculations by the group suggest the increase is aimed at $41 a square metre which would drive the building into the A-Grade category.

The reasons behind the rent increase are not entirely clear to tenants. Many pay on a monthly basis. Low rent occupiers are vulnerable. Some tenants pay as much for internal spaces without windows as those with views.

As one of 90 tenants with individual leases, it is difficult for any occupier to develop a whole-building point-of-view.

Sublets, storerooms, creative hubs, studios and shared office space are some of the models used by tenants to subsidise rents. Many like the anonymity of the building. Windows open onto laneways.

Until recently, homeless people slept in passages. Sparrows jump around on window ledges. “Getting a tenant’s union up and running would be like trying to organise alley cats,” said one tenant of the second floor.

When the CBD News went to press, tenants were planning another meeting. “Metro Link is telling us there will be no disruption,” said Mary Farrugia from the bead shop on the first floor. She finds this difficult to believe.

“We’ll be surrounded by rubble and trucks,” said Loretta Hemengsley of Collected Works, a bookshop of poetry and ideas. The shop depends on attracting customers to its poetry readings.

It won’t be known if tenants have rights to claim compensation until the project said, says Peta Olive, a lawyer with Aitken Partners, forcing them into a wait and see game.

The Minister for Planning Richard Wynne, says the State Government is “acutely aware of the cultural and historic significance of the Nicholas Building” but the challenge for tenants is that, despite the potential suffering ahead there is no better location in Melbourne. People will pay top dollar to “slum” it in a cool place with wire glass windows, parquetry floors and a reputation.