The environment has changed so much in the last few years in particular, that property developers are now the leading insolvency sector, andour communities are in turn dealing with an affordability crisis, according to the author of this opinion piece, Founder Director of Heard and Tallpopie Darragh Heard.

Darragh Heard.jpg — Founder Director of Heard and Tallpopie Darragh Heard

Blue-chip apartment developers have branched out into BTR, and some are going back to their house building roots to support revenue in a downturn market, but with no bail outs in sight, innovation is the only way to ensure the industry as a whole - especially our independent and SME builders - can survive this ‘season’.

Between land tax, loan interest rates and huge cost of insurance, there’s so much more pressure on apartment developers to break ground faster. However, it simply becomes unviable when all costs are accounted for.

Shifting gears to the commercial property sector, around 35% of employed people work from home (almost triple pre-Covid), which means office vacancy rates are at an all-time high of 14.5%, the highest since 1995. This isn’t forecast to decline.

And for those businesses who are still maintaining CBD offices, with the new supply of high-end spaces and the rise of amazing new shared facilities that not only reduce liability and costs, but also provide a bunch of social and amenity benefits - product is far exceeding demand, and empty offices are a permanent sight.

Industries and markets have shifted, too fast to keep up with, so it makes sense to look at stock we already have and find alternative uses for them.

Repurposing existing corporate structures is an innovative approach to residential developments that could be a saving grace for many developers and buyers alike, but it’s obviously also a far more sustainable approach to build.

Typically, the cost and time to cut into the ground and lay new foundations accounts for anywhere between 10 and 20% of the total time and build cost of a project. That’s a significant savings to a builder by leveraging something that is already there.

Repurposing materials where possible provides further cost savings whilst adding character, and the council approval process in theory should take significantly less time (and tax funded resource). The faster thebuilding is ready, the faster revenue exchanges.

Cost viability can also apply to the consumer buyer. Around a third of our adult population don’t relate to the Australian dream of owning their own home because it means putting around half of their earnings toward a mortgage, andthat’s before maintenance, utilities and insurances even come into play, let alone feeding, clothing and schooling any kids.

But if the cost to build is reduced, it may mean the cost to buy also comes down. The more and more developers who take on these projects, the more choice and the healthier market competition we drive, which in turn can level out the market and make home ownership more realistic for some people.

And crucially, the sustainability of reuse projects is not to be underplayed, especially given Australia’s emissions targets. The carbon credit that builders can attain is a tradable financial instrument that demonstrates how much carbon dioxide emission has been avoided or reduced.

Given the incredible opportunity and solutions that reuse developments offer to industry, economy and social, the acronym CBD may not be a familiar term to our next generation as our built environment evolves to meet societal change.

Image: Melbourne CBD / studio88poland on Envato

Architecture News & Editorial Desk

Let’s connect!