Adapting Our Heritage
What are some of the biggest advantages for the development industry in undertaking adaptive reuse, especially when compared to demolishing and starting with a new design?
It was actually Perth’s ‘knock down and rebuild’ mentality some two decades ago that motivated my business partner and I to start our company.
At the time we witnessed the constant dilapidation of magnificent structures throughout the City to make way for bland ‘cookie-cutter’ builders, with no foresight for the visual impact or surrounding aesthetics.
We believe the development industry has a responsibility that extends far beyond built structure. It’s about maintaining the integrity of our streetscapes and understanding that the built form is something that is enduring and plays a significant role environmentally and culturally.
Adapting heritage form for modern-day use captures a story from the past and creates a unique and unreplaceable space, and this makes good sense socially and commercially.
What are some of the biggest challenges involved with the process?
Certainly, the biggest challenges when taking on an adaptive reuse project are those that can’t be immediately identified. This is largely the reason why so many developers have historically shied away from taking them on.
While X-ray technology has improved our capacity to assess a building’s structure, in most cases issues are only uncovered during the development process, which can impact significantly on the budget.
It is an incredibly rewarding challenge to explore ways of introducing modern day requirements into early design, when items such as electricals, plumbing and energy efficiencies had not been a consideration during construction historically.
We introduced a false floor methodology in our Heirloom building to accommodate services in order to maintain the ascetics of the Jarrah beams and exposed timber throughout.
Do you think the process of adaptive reuse is undertaken enough in Western Australia? If not, why not and what more can be done to encourage it?
We have come a long way from the early days when buildings were deliberately left so derelict that demolition was ultimately the only options. It is devastating to think of all the lost opportunities.
We are in different time now and I believe the industry is well across the intrinsic value heritage fabric can bring to a project and its surroundings.
That said, not every heritage property can be justified in a competitive marketplace, and returns need to be factored into each project. It is unquestionably more expensive to take on heritage work and navigate the development limitations.
Financial and process incentives would certainly compensate the developer and encourage more work in this area.
Of the projects you have worked on, from an adaptive reuse basis, which is your favourite project and why?
Without question, “Heirloom by Match” in Fremantle holds such significance as a community icon with an incredible depth of history. Being able to reactivate this site for modern-day use after so many decades of deteriorations truly an honour, and our success in retaining over 85% of the heritage fabric is an incredible achievement by my team.
However, “Home” in Perth represents a real turning point for adaptive reuse in Perth. We were more or less the only company taking on projects of this magnitude at the time and it really allowed us to demonstrate what could be achieved.
When we started this project, the building was locked up and covered in graffiti. Our work uncovered an architectural masterpiece that was nothing short of impressive. It created streetscape presence that helped to shape the west end of Perth’s CBD.
After its opening, there was a real industry shift towards our cause. I will always be very proud of our work on that property.
Aside from the heritage/historical significance of utilizing existing buildings, what other benefits to adaptive reuse are there?
While there is a a great deal of benefit affiliated with historical significance and heritage features, any project must also make financial sense.
We find that people ultimately buy into these projects for their uniqueness. There is no comparison to a modern building and these factors allow for a pricing model that can adequately cover additional development costs.
The boutique nature of these projects mean they hold a strong market value, and as consumers are are buying a piece of history, it is perceived as priceless.
Any further comments you would like to make around adaptive reuse and its benefits for the Western Australian development industry?
I truly believe Perth now fully realised the value of our heritage structures.
The City is extremely fortunate to have such a strong Heritage Council body to partner with developers and ensure each project has the best outcome, and local government stakeholders appreciate the significance of our work within their jurisdiction.
The level of collaboration required to bring these projects to fruition cannot be understated.
Comments for UDIA attributed to Lloyd Clark, Managing Director of Match parent company M/Group
Read UDIA’s full article here
A Wall of Cash is Coming: This is How to Invest It
Read moreA Wall of Cash is Coming: This is How to Invest It
With the wall of cash dividends hitting investors’ accounts over the coming months due to surging iron-ore prices, there is one question top of mind: What to do with the cash?
Industry analysts are predicting the dividend windfall from BHP Limited (ASX: BHP), Rio Tinto (ASX: RIO) and Fortescue (ASX: FMG) could top $65 billion over the year, in addition to the $7 billion from the Big 4 banks. With the current cycle of almost zero cash rates, the race is on to find sustainable income-producing investments.
Amid the noise of an exciting investment market, there are solid, high-yielding investment opportunities in the periphery of the action that offer both security and good returns.
How to find property assets that stack up
Australians love affair with property has become even more pronounced since the initial shock of the COVID-19 pandemic panic set in. We are both staying and investing locally. House prices from the east coast to the west coast have sky-rocketed and commercial and industrial assets are in hot demand with a raft of banks and non-bank lenders ready to lend money.
The level of appetite and competition in this space is highlighted in Stamford Capital’s latest Debt Capital Markets Survey, which tracks lender sentiment and the latest trends in the real estate debt market.
Based on responses from over 100 lenders, including banks, non-banks and private financiers, the survey found a “dramatic swing from the bleak outlook a year ago” when capital dried up, leverage levels decreased and lending criteria tightened.
Carried out in March this year, the survey found lending appetites were back at pre-COVID levels with increasing deal competition from a growing pool of non-bank lenders expected to compete more heavily on price and force down interest margins.
Private capital chasing higher yields in the booming property market has seen a large increase in the number of new non-bank lenders offering construction and investment loans this year.
While the pool of debt is available, and still relatively cheap, the trick is trying to find the property assets that stack up. This is where an experienced property fund manager can sort the wheat from the chaff. Sourcing the asset is one thing, knowing if you are paying too much is another. Selectivity is the key.
Mining the macro and geographical factors
Looking at macro factors and geographical location is also vital. Where are the industrious activities happening? City or regional, coastal/ports or mining? The mining industry for example has seen a significant uptick since June 2020. Mining exploration in Western Australia is almost at record levels and the capital raising pipeline is strong.
The Australian Securities Exchange notched up 42 IPOs in mining-related businesses over the past 12 months to April 2021 and despite the Covid-19 pandemic, is well ahead of other hotspots including Toronto, with 28, and London with two, according to data compiled by Bloomberg.
With the recent news of a $500 million investment in the Kalgoorlie-Goldfields region by Lynas Rare Earths, along with a $400 million commitment from Evolution Mining (ASX: EVN) for the acquisition of a collection of Northern Star (ASX: NST) mines on the western side of Kalgoorlie, and BHP recently revealing it has struck a deal to supply nickel from the region to Tesla, the region is experiencing a level of sustainable economic activity not seen for many years.
So, it appears on a macro level, locations near to, and supporting the burgeoning mining exploration and production sector seem sensible. Resources need resources, including human capital. But accessing large commercial and industrial assets in those regions is not an option for many individual investors.
A golden commercial opportunity
It takes a skilled property fund manager to find the asset and assess it on its merits.
In the case of commercial property, is it tenanted, to whom, and for how long (WALE)? What are the costs associated with acquiring and managing the property? What is a fair acquisition price and how will it be funded? If everything stacks up, then a due diligence process will follow. Lenders are appointed and capital is raised (normally to the tune of 50% debt funding by banks/lenders and 50% by investors).
For both groups, returns need to be negotiated. And in the case of capital provided by investors, a yield or distribution based on the rental income received will be passed on monthly or quarterly, for the life of the investment, which usually stretches to between five and seven years.
Perth-based M/Group has recently gone through that process on a macro and financing level and plans to invest in a large format, fully leased 6000 square-metre commercial asset in Kalgoorlie, Western Australia forming the Boulder Road Property Trust.
In the heart of the Goldfields, Kalgoorlie is home to 30,000 people, swelling to 40,000 in boom times. With three national tenants locked in for a WALE (Weighted Average Lease Expiry) of 8.08 years, the fund is targeting monthly distributions to wholesale investors of 8% pa for a period of seven years (unless the asset is sold prior and capital returned). That’s 7.5% higher than the current cash rate. Importantly, the tenants are high quality and essential to the locals and the resource sector – RSEA, Autobarn and Heatleys.
M/Group’s Latest Investment Opportunity
Read moreM/Group’s Latest Investment Opportunity
A brand new opportunity to invest in an income asset fund and partner with M/Group in the acquisition of a newly constructed, fully leased, large format retail property.
Learn more about how this property and its tenants will service their community, while providing investors with a target distribution of 8% p.a paid monthly by visiting: www.boulderpropertytrust.com.au
Heirloom Takes Home Another Win
Read moreHeirloom Takes Home Another Win
Boutique apartment company, Match, was honoured to take home its third Heritage Award for its work in transforming Fremantle’s iconic Dalgety Wool Stores into unique residential industrial warehouse apartments.
WA Apartment Advocacy hosted the 2021 WINconnect Apartment Awards for Excellence over the weekend celebrating those who have played an instrumental role in introducing Perth to the idea of design and amenity-led urban living through apartment development.
Heirloom by Match is one of the largest heritage renewals in the State, and award judges acknowledged “…Match demonstrated fearlessness and innovation in transforming this heritage building into an exemplar of what the City of Fremantle can expect from future developments of a similar ilk.”
The site had sat largely unused for 20 years prior to completion in 2016 and now with all apartments occupied the judges said the project is “…a charming apartment community that pays tribute to its heritage roots.”
Managing Director of parent company M/Group, Mr Lloyd Clark said the awards are a great honour to be recognised and acknowledged by the industry and peers.
“Drawing on our experience with heritage renewals, we knew from the outset that this project would present challenges, however we also saw it as an extremely important opportunity.
“Match is in the business of developing signature properties. It is our firm belief that people want more from their homes, and today Heirloom residents are creating their own space amidst 100 year old Jarrah beams and original heritage features,” he said.
Heirloom by Match was designed by Dominic Snellgrove of Cameron Chisholm Nicol and constructed by national top tier construction company, Built. The development team worked in collaboration with the City of Fremantle, State Government and heritage authorities to achieve a positive outcome.
“Heirloom is unquestionably one of Match’s most significant development projects in the company’s 20 year history. Its location close to Fremantle’s café strip and between the river and the beach is ideal, and it has helped to activate the City of Fremantle and its growth” Mr Clark continued.
“The renewal process was sensitive in nature and proved extremely complex. However, the recognition and accolades we have received are both humbling and extremely rewarding.”
Match had previously been awarded the Heritage Council’s ‘Conservation or Adaptive Reuse of a State Registered Place’, and the prestigious Gerry Gauntlett Award; recognising an outstanding achievement of adaptive reuse in Western Australia for the Heirloom Apartments in 2017. Match was also recognised with the Gerry Gauntlett Award prior to this in 2008 for its highly acclaimed Home warehouse apartments located in Perth CBD and is responsible for other heritage-listed projects such as Maymont in Maylands and Clocktower in Inglewood, which effectively injected new life into the area, as well as a range of cutting-edge design-inspired apartment properties throughout Perth.
For more information visit www.heirloombymatch.com.au or contact 0432 660 066
Playground Completed | The Wedge, Wellard North
Read morePlayground Completed | The Wedge, Wellard North
The Wedge at Wellard North is coming to life!
We have construction of new stages, homes being built, people moving in and have just completed the landscaped park and playground all with the stunning and protected bushland backdrop as you can see in this video.
Bunnings Warehouse Albany | Construction Completed December 2020
Read moreBunnings Warehouse Albany | Construction Completed December 2020
Construction completion of the new Bunnings Warehouse has been achieved, located beside Chester Pass Mall in the regional south west town of Albany.
The Bunnings Warehouse site spans across 15,000m2 and was constructed by M/Construction in conjunction with Aboriginal-owned company, Marawar.