Freo markets dispute escalates

FREMANTLE council will decide on May 20 whether the operators of the Fremantle Markets have breached their head lease with a new rent structure, after stallholders complained recent rent hikes were not fair market value.

The rent controversy adds to an escalating dispute between the Fremantle Markets Stallholders Association and the markets' managers, Jamie and John Murdoch.

The association commissioned Perth-based property valuers Porter Matthews to make a national rent comparison with popular markets in Sydney, Melbourne and Adelaide.

Porter Matthews suggested the Fremantle rents could be among the highest in Australia, but acknowledged there were limitations on its findings because the stallholders association had requested them not to access tenancy information from the Murdochs.

Although seven out of 172 stalls were assessed, Porter Matthews made indicative findings that the proposed new average annual rent at the markets was $1,310 a square-metre, an increase of more than $500/sqm.

The property valuer compared its valuation to Fremantle business district rents, which average $900/sqm, and Paddy's Markets in Sydney which charges an average $1,500/sqm, concluding that Fremantle's rental structure was significantly higher than other capital city markets except for Sydney.

Fremantle Markets director Jamie Murdoch said the document produced for the association was not a valuation, nor did it purport to be, and contained factual and legal inaccuracies.

"Our rents are not the highest in Australia, and even the rental report doesn't suggest they are," he said.

"It claims we would be one of the highest once the new rent structure is fully in place.

"We have strong grounds to question the basis on which this statement has been made, including the fact the report is based on limited information.''

Mr Murdoch has maintained that the markets' rents have been artificially low since 1975 and that stallholders had been sheltered from the full impact of the council's annual rent increases to management during that time.

Stallholders association secretary Colin Wright said the markets' operators had failed to properly negotiate the rental agreements with stallholders and that the new rents were not fair market value.

"When [the Murdochs] were awarded the lease last year they assured the council they would run a low-cost trading environment for stallholders," he said.

"You can't just say to a stallholder, 'we are putting the rent up, this is the new price, take it or leave it'; fair rent needs to be willingly negotiated."

The City of Fremantle entered into an 18-year lease agreement with the Murdoch's company Fremantle Markets Pty Ltd in March 2008.

Since the head lease became effective in June last year, the markets' operators have rolled out new sub-leases and licences to stallholders in a batching process requiring an expression of interest from stallholders.

The stallholders association alleges the process breaches provisions under the head lease, questioning whether the EOI provides an adequate opportunity for negotiation.

WA Business News understands that about half of the 172 stallholders have received an EOI and up to 96 per cent of those have signed the form.