Design firms miss boom spoils

MANY of the state’s design firms are missing out on the positive flow-on effects of the resources sector into complementary industries.

New waterfront developments, Elizabeth Quay and Waterbank, as well as CBD developments, such as City Link, open up new opportunities for design work, however, the firms that benefit most from these projects are the large design studios.   

Since the GFC, smaller Western Australian design firms have relied on government stimulus spending as their main source of income, through projects such as the $16.2 billion Building the Education Revolution.

“The market has been very difficult over the last couple of years, particularly for a lot of the small design business practices,” HASSELL managing principal John Crabtree said.

The best indicator of this was HASSELL’s staff numbers. Although it is the largest firm in Perth, according to the WA Business News Book of Lists, working on the more lucrative projects, it has only just returned to its pre-GFC level of 158 staff this year, having previously dropped to 126 in 2011 and 123 in 2010.

Mr Crabtree said HASSELL had been able to balance its drop in business through large projects it secured, such as Brookfield Place, the Fiona Stanley health district, one40william and the Waterbank development.

However, small firms have not been able to prop up their businesses with big projects because they do not have the resources to accommodate for the scale of them.

Sandover Pinder Architects managing director David Karotkin said that since the GFC, Sandover Pinder had to focus on government projects. Commercial projects have dropped off significantly and have yet to come back.

The biggest hindrances to developers pursuing projects with design firms have been a tight financing market and Perth’s expensive building costs.

JCY Architects & Urban Designers director Richard Young said high building costs came as a result of increased wages needed to keep skilled tradesmen in the metropolitan area and away from fly-in, fly-out work.

These costs have been detrimental to the development of key facilities in the city. 

“There has been significant demand over the last 10 to 15 years for new city hospitality projects, but cost has been prohibitive and subsequently these projects haven’t come to fruition,” Mr Crabtree said.

Tourism WA’s Hotel Investment package identified “Perth as the strongest performing CBD hotel market in Australia” and the state government has introduced incentives such as discounted crown land values for hotel developments, the allocation of government funds for infrastructure upgrades for new hotels and flexible plot-ratio bonuses to promote hotel development.

“There is definitely a renewed appetite from hospitality projects and hospitality developers, it is an area I can see with immediate growth,” Mr Crabtree said.

HASSELL had seen considerable interest at iconic sites around the city – such as Elizabeth Quay and Waterbank, which have several designated hotel sites, and had already had potential developers through its studio.

Earlier this year, the Property Council of Australia recommended Perth increase its plot ratios to accommodate more office and residential space in the city.

Allowing more floor space would help alleviate some of the high costs associated with building, Mr Crabtree said.

With CBD office space vacancy at 4 per cent, hotel capacities exceeding 90 per cent and minimal inner-city housing, there is strong demand for development, which could help local design firms.