Property owners' intentions for their commercial buildings revealed via Colliers International's ACT Light Rail Survey.
The ACT Government released its Indicative Land Release Program in June, identifying new development and renewal opportunities in Canberra and along the entire length of the Light Rail network. Colliers International has identified more than 2,000 units to be supplied along the Stage 1 route over the next five years.
According to Colliers International’s Light Rail Survey results, despite the significant pipeline of residential projects along the light rail route, commercial property owners are generally optimistic (57%) that the ACT Government’s land release programme would not lead to a long-term over-supply of residential dwellings nor a negative impact on their commercial property values.
Matthew Winter, Manager at Colliers International said, “Feedback from commercial property owners suggested that an oversupply, if any, is likely to occur in outlying locations rather than along the rejuvenated Northbourne Avenue corridor, particularly given the major infrastructure to support these new dwellings and higher residential volume.
“Whilst some owners did express views that the ‘rushed land release’ may create an initial oversupply (43% agreeing), the ongoing population growth of the Territory and high-profile location would ultimately ensure long-term viability of these developments,” he said.
ABS data revealed that Canberra’s population reached 406,403 as of December 2016, surpassing the ACT Government 2017 population projection of 405,447.
“Canberra is the fastest growing city in Australia and we’re seeing more people move to Canberra daily. The Territory is currently growing at approximately 1.5% annually, suggesting growth rates of approximately 6,500 residents per year,” said Matthew.
“Development activity is the highest it’s been for the past 17 plus years. Impending projects and recent land releases such as Midnight, Midtown, Dickson on Northbourne, Lyneham on Northbourne and the Dickson Motor registry are some examples of major urban renewal projects slated along the Stage 1 light rail corridor.”
The ACT Government’s land release program indicated further sites such as Macarthur House and Northbourne Flats in Turner to be sold for redevelopment purposes both of which will lead to further residential infill.
Colliers International’s research revealed that many commercial building owners along the Northbourne corridor have investigated developing or selling their buildings for residential purposes. However, numerous owners believe there are many obstacles that affected the viability of residential redevelopment including heritage and planning restrictions, parking requirements and most notably the recently revised Lease Variation Charge (LVC) which incorporates a vastly greater development tax for residential land being redeveloped for unit and townhouse purposes.
The Survey stated that owners cited LVC as the major deterrent for redevelopment of privately owned buildings and land along Stage 1, which is somewhat contradictory and inconsistent with the ACT Government’s aim to stimulate the redevelopment of the Northbourne Avenue corridor into a highly-densified world-class gateway.
Matthew said, “Commercial property owners seemingly believe that there will be continued demand from owner occupiers, investors and developers for opportunities along the corridor, particularly for assets showing future redevelopment potential. Coupled with the fact that some property owners have already investigated their buildings’ development potential, we are likely to see some more buildings converted to residential or mixed-use along the corridor.
“Despite high levels of upcoming supply, increased dwellings, population and activity at street level will arguably support tenant retention and amenity for businesses making Northbourne a more desirable location. It will also create further construction activity and jobs for the ACT, which would be a positive outcome for our economy,” said Matthew.