Open for inspection

By Rhonda Dredge

Living and working in the CBD has been difficult since the pandemic be- gan and no clear picture of the future has yet emerged.

Real estate agents, building owners and tenants may hold the keys to the actual rental space but their hands are tied.

Everyone is waiting on government announcements in terms of workplace safety.

Agents are hopeful that open house inspections will be permitted in early December, following the regular Sunday press conference by Premier Daniel Andrews.

Flinders Lane agent Dionne Wilson, of Harcourts, predicts that a move from private to open house inspections will ease the pain of selling and renting apartments.

For the past month, individual inspections have meant that clients look at properties one at a time.

Dionne has a heritage apartment for sale in the old Masonic Lodge on Flinders St. The two-bedroom apartment is on the market for $650,000 and she hopes it has held its price.

“I won’t lie,” she said. “We have a 30 per cent vacancy rate in the CBD. I expect other agents are in the same boat. It’s been a difficult time.”

Residential real estate depends on getting buyers and renters through properties but this was banned during Stage 4 restrictions.

“I rented out a few apartments sight unseen,” Dionne said. “We created escape clauses. Two clients stayed on but a third reduced the lease to three months.”

Renters are benefitting by an esti- mated 20 to 25 per cent drop in rents. This ranges from $50 to $200 a week.

Many are renegotiating their leases based on the rentals being asked for empty apartments in their buildings.

The vendor of the Masonic Lodge property previously rented it to visitors through Airbnb but this was banned during the COVID crisis. She had four other CBD apartments on the books and ran them as a business.

“Now she’s got a fulltime job,” Dionne said. “She’s selling kitchens.”

Commercial building owners have had even less leeway to open up their buildings to potential tenants. Many have been forced to reduce rents on unoccupied offices and put up with vacancies.

King Ng’s family business owns a nine-storey commercial building in Collins St. They have reduced rent for tenants but at this stage office workers are still expected to work from home if they can.

“No-one knows what is going to happen,” King said. “Some companies won’t need as much space. Surveys show that 70 per cent of staff say they want to work two-three days at home.”

The sub-leasing rate in both Melbourne and Sydney has increased and some of the corporates have been downsizing their CBD office holdings. KPMG is looking to sub-lease and others are considering moving their offices out of the CBD.

But King predicts that only government and large companies will go down the home office path to retain talent and this is a sentiment echoed by small businesses with a strong commitment to the CBD.

Dionne said that it took 40 minutes on Zoom to teach an intern some- thing that would take two minutes face-to-face. “We’re desperate to get back to the office,” she said. “I’ve got the space so it makes sense to have people in it.”
A survey by the Building Council of Australia found that just seven per cent of building owners in Melbourne’s CBD thought that workers would return this year. This compares to 40 per cent in Sydney.

The survey was done in October, however, and the goal posts can move quite swiftly. Who would have thought that the number of cases would drop so resoundingly to zero?

CBD businessman George Richards manages an educational recruitment company in Flinders Lane. He said he would be moving back next year but he was too busy on Zoom to elaborate.

“Super sorry, but I’ve just been dragged into another meeting, which blocks out my day (don’t love the meeting density brought about by COVID),” he texted.

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