Freo markets lease in public eye

Recent discussion concerning the ownership of the Fremantle Markets site has highlighted the process by which the operators of community assets secure leases.

The City of Fremantle council voted at a recent meeting to advertise a business plan that would extend the Fremantle Markets lease with current operator – Fremantle Markets Pty Ltd (FMPL) – for 20 years.

John Murdoch opened the markets on South Terrace in 1975 and the family’s company, FMPL, has been the lessee since 2008.

The item initially seemed to be a straightforward council matter, with the recommendation approved that the business plan be advertised for 42 days.

However, the council vote came after two weeks of speculation in the community that another investor had submitted an offer.

According to a city policy, a lease did not have to go to tender if the tenant was paying full commercial rate and added significant value to Fremantle’s overall tenancy mix and appeal for visitors.

Fremantle Markets chief executive Natasha Atkinson told Business News FMPL had exceeded those metrics.

“In any case, because the lease with FMPL runs until October 2026, there’s no tender,” Ms Atkinson said.

“We have no interest in moving our markets business. We simply want to operate our business from a structure that is safe and sound.”

It was noted by council that the lease was for the building only, not for the business operated by FMPL.

During a council meeting on May 31, Tim Foster, of GTL Investments, said he had sent the city an indicative offer for the markets lease with a proposed base rent of $650,000, an amount $100,000 more than the business plan drafted with FMPL.

“GTL is committed to invest $6.5 million in capital works and urgent repairs over 10 years,” Mr Foster said.

The unofficial proposal drew a mixed reaction in the community, with some parties arguing in favour of a competitive tender process rather than a renewal of the lease.

Fremantle Mayor Hannah Fitzhardinge said the recommendation to advertise the business plan instead of going out to tender was based on the city officer’s professional assessment.

“We want to be a good landlord. We have a policy that allows us to go down this route; it’s compliant with the Local Government Act and I fully support advertising … the business plan,” she said at the meeting.

Ms Atkinson said FMPL had offered to pay for repair works on the site but needed a long-term lease to offset the costs.

“For many years now, the City of Fremantle and all of us at Fremantle Markets know the historic markets building needs urgent works,” she said.

About 33.5 million people have visited the markets since the current lease started in June 2008, according to the city’s business plan.

“The disposal will provide continuity to the current service being provided and add value by way of the proposed tenant funding capital improvements to the facility,” the city’s business plan said.

“It will also provide greater certainty to the 157 small businesses [existing stallholders] over a shorter period of time.”

The business plan will be advertised until July 14, with submissions to be presented to council.

The city’s business plan to renew the lease with FMPL had little in common with the process undertaken with Barchetta restaurant on Marine Parade in North Cottesloe.

The lease for Barchetta expires on June 11. Photo: Nadia Budihardjo

The Mediterranean restaurant opened its doors in 2002 and had become popular with western suburbs residents.

The lease over the Barchetta building had been addressed by The Town of Cottesloe earlier, with a shortlist for tenders finalised in July 2022. The council amended its tender process in February this year.

However, the matter had always been discussed behind closed doors and information rarely forthcoming, even for the tender applicants.

The final decision was made when the council chose Kailis Hospitality Group as the preferred tenderer during a special council meeting held on May 16, after an hour of confidential talks.

After more than seven years running Barchetta, the King family had said their farewell when the lease expired on June 11.

On their social media, the Kings said they had been embraced by the Cottesloe community since the first day of operation.

Co-owner Chris King said he knew the family would need to re-bid for tender but was disappointed with the decision.

Mr King said the family had no plan to launch another hospitality venture, with the leasing process taking a toll on his parents, Phil and Jane.

“We’re pretty burnt by the situation; getting through COVID was bad enough,” Mr King told Business News.

“People see this as one thing … [but] the process with council has been going on for years.”

Cottesloe Mayor Lorraine Young said the decision had not been made lightly and councillors were aware of the consequences for the parties and the community.

“However, council is responsible for the management of the town’s assets in the best interests of Cottesloe residents and ratepayers as a whole,” she said after the meeting.

“A thorough and rigorous process has been followed in determining the preferred tenderer.

“Council took independent commercial advice and then called for expressions of interest for the lease.”

Ms Young said the tender responses were evaluated by independent commercial experts.

The shortlist comprises Kailis Hospitality Group, the King family trading under Yellowdot Enterprises, Michael Lloyd of Yiamis Pty Ltd, and John Parker, who is behind The Royal in Perth and Dandelion in Karrinyup.

Ms Young said the town would prepare a business plan based on the preferred tender response, to be published for a mandatory six-week public comment period.

“If there are no public submissions, the town will proceed to lease the premises to Kailis Hospitality Group,” she said.

READ MORE: Kailis unveils Magic Apple plan for Barchetta

Despite the two councils’ different processes, the public attention given to these leasing arrangements is similar to the outcry over Picabar five years ago.

In late 2018, the operators of the Northbridge venue revealed that their lease was terminated by the state government, and they had been operating month to month since the expiry of a six-month lease in 2012.

Management of the Perth Cultural Precinct, where Picabar is located, had been transferred from the state government to the Perth Theatre Trust in October 2018.

A year later, Culture and Arts Minister David Templeman announced that a new lease between Perth Theatre Trust and Picabar had been negotiated.

A five-year agreement, with the option for a five-year extension, was struck with owners Melissa Bowen, Brian Buckley and Conor Buckley, operating under Lazarus Pty Ltd.

Perth Theatre Trust has since been replaced by the Arts and Culture Trust.

A trust spokesperson confirmed that Lazarus Pty Ltd had a lease for the building until September 30 2024.

“There is a five-year option to extend the lease to September 30 2029,” the spokesperson said.

“Discussions have not yet begun regarding the option to extend.”

Public support for the bar and its role in activating the Perth Cultural Centre were reasons cited by Mr Templeman for the lifeline.