Could turning office towers into apartments be the solution we need? No.
So things are getting a bit “panicky” in Melbourne. It’s getting a bit edgier.
And now they’re talking about turning empty offices in Melbourne CBD into apartments in an attempt to ‘revitalise the city’.
With business leaders and the Melbourne City Council concerned that WFH could become permanent, they have devised a plan to convert empty office space into apartments in a bid to revitalise the CBD:
Empty office towers would be turned into apartments in a dramatic effort to bolster Melbourne’s ailing CBD.
White Night-style projections would also be beamed on to heritage landmarks and big discounts offered to lure locals to multicultural precincts.
A high-powered committee tasked with revitalising the CBD will discuss the proposals this week…
Lord Mayor Sally Capp, who has formed the advisory board, said converting empty offices into residential buildings could revitalise the city as more people continued working from home and shopping online even when the pandemic was over…
“This global pandemic has knocked us for an economic six,’’ Cr Capp said…
“We can stimulate economic activity, create jobs, build more homes and boost the number of people in our city by finding ways to encourage retro-fitting of commercial buildings into residential accommodation.
“This will also ease the burden of the housing shortage…
Some workers aren’t expected to return with the commercial vacancy rate to hit at least 10 per cent.
I think it’s a bit telling that authorities are talking about retrofitting a whole bunch of offices as being a Covid response.
How long does it take to retrofit an office tower? Flipping ages, would be my guess.
So how long are they expecting Covid to stick around? How long are they expecting the hit to the economy to last?
Again, flipping age would be my guess.
And you’ve got to wonder about the sense of this anyway.
Because one thing Melbourne doesn’t have now is a shortage of inner city apartments. From the AFR:
…According to City Residential Real Estate, there are nearly 27,000 apartments for rent in Mebourne’s Docklands, Southbank and inner Melbourne, an increase of about 500 in the past week.
That 27,000 sure sounds like a lot, but is it?
Yes. Yes it is. Check out the vacancy rate in Southbank:
Or Melbourne CBD:
There’s an abundance of options there for apartment renters already. I don’t know that adding to this stock should really be a public priority.
Because it means that “revitalising” the CBD, would probably just mean “de-vitalising” Southbank.
I’ve been warning people about these high-rise apartments for close to six years now.
And broader market fluctuations aside, the real challenge with apartments is that it’s very hard to do anything to them (ever heard of someone adding a granny flat to an apartment), and if there’s a lot of stock on the market, it’s very hard to differentiate your property from the pack.
That means that when the market turns, like it is right now, there is very little you can do. You are really at the whim of the market.
Tough lesson to learn.
But tough lessons? 2020’s got a bunch of them.