07/10/2010 - 00:00

Industry calls for funding certainty

07/10/2010 - 00:00

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INDUSTRY has called for the creation of an industrial lands redevelopment authority and a $2-3 billion infrastructure fund to facilitate the planning and delivery of industrial land in the metropolitan area.

Industry calls for funding certainty

INDUSTRY has called for the creation of an industrial lands redevelopment authority and a $2-3 billion infrastructure fund to facilitate the planning and delivery of industrial land in the metropolitan area.

The Property Council of Australia has addressed industry’s concerns with industrial land supply in the metropolitan area through its submission to the Western Australian Planning Commission’s draft Industrial Lands Strategy (ILS).

According to the council, the strategy currently contains little detail on how industrial land infrastructure priorities will be set and paid for.

The PCA’s submission, developed after lengthy consultation with industrial land owners, developers and users, identified current levels of industrial land supply would only meet 37 per cent of forecast demand up to the year 2031, due to a variety of constraints on land identified for industrial use in the ILS.

The final release of the ILS is due for the first quarter of next year.

Property Council Industrial Lands Committee member Jason Willoughby said a dedicated industrial land redevelopment authority would help developers navigate planning pitfalls and identify future infrastructure requirements for industrial land estates.

Mr Willoughby said the Armadale Redevelopment Authority’s work at Cockburn Central, where there are multiple landowners holding a large tract of industrial lots, was a good example of how a redevelopment authority could facilitate the delivery of new industrial estates.

The redevelopment authority would preside over a developer contribution scheme, designed to distribute the cost of new infrastructure between developers based on land area, Mr Willoughby said.

“To coordinate all those people and to try and get money from all of those people for infrastructure, is next to impossible,” Mr Willoughby told WA Business News.

“So to break that deadlock, a redevelopment authority comes in with seed capital.

“In the case of ARA, they had $10 million loaned to them by LandCorp, and with that $10 million, they delivered power, water, sewerage and roads, which allowed developers to develop their lots.

“When they developed they had to pay a developer contribution based on the developable area.

“That went towards paying off the $10 million loan, as well as going towards paying for other further infrastructure requirements, including landscaping and things like that.

“You need that seed money to kick it along, but it’s good for the government because they get their money back, they get interest on it and they’ve got the development in play.”

The PCA also proposed the introduction of a metropolitan infrastructure fund worth between $2 billion and $3 billion over 10 years to upgrade and construct key infrastructure needed for industrial land.

Infrastructure covered by the fund would be roads and stormwater drainage, power, wastewater, gas, rail, water, strategic planning, and telecommunications.

“The linkage of infrastructure provision to newly identified industrial locations, with the cooperation of private and public investment is of critical importance,” Mr Willoughby said.

“Painting purple on a map is not enough, without the right infrastructure linking to industrial estates then development of these areas is simply not viable.”

Industrial lands agents Savills director of industrial, James Condon, said a crucial issue with the supply of industrial land in Perth was a shortage of well-located, well serviced larger lots of 4,000 square metres and 10,000sqm.

Mr Condon said there were currently large lots available at Hazelmere, but the majority of the land was not zoned for industrial use, and required infrastructure development that would be two to three years away.

Also, a shortage of undeveloped land throughout the metropolitan area had hampered expansion plans from major national logistics and transport companies CEVA Logistics, Toll and Linfox, Mr Condon said.

“Those guys are pitching on tenders at the moment on the back of Gorgon and they are in the market at the moment looking for space,” he said.

“There is space out there, but it’s just not the quality these guys require.

“Typically, the majority of developments in Perth, the sites are fully developed, and by that I mean that if they have a one-hectare site they’ll build 5,000sqm of warehouse.

“A lot of these guys require a lot of lay down area, and that’s been their biggest difficulty, trying to find sites in the metro area that are not fully developed and have some hard-stand area so they can lay down equipment.

“It’s very difficult for them to secure these sites, they’re just not around.”

Mr Condon said he had been in discussions with a group from Queensland, which had been looking at a Western Australian expansion for over six months, but had been held back by the lack of suitably sized and located industrial lots.

Another factor constraining industrial land, Mr Condon said, was developers not being able to purchase land, because banks and financiers remained reticent to lend on vacant industrial land and non-income producing assets.

“It’s extremely difficult for anyone to get finance to purchase the land, should it be available, and there is limited opportunity because the majority of the transport and logistics market want to be close to the airport, i.e. Forrestfield, Kewdale, Welshpool and Hazelmere,” he said.

“The land is just not there.”

 

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