Integration and cohesion the key to commercial land development

Are our laws and government structures inhibiting the good commercial development of our land?

The development of land in Western Australia is subject to much legislation and regulation.  Whilst this legislation and regulation is for the most part well intentioned, there are often inconsistencies that inhibit the very objectives this legislation and regulation was intended to achieve.

The inconsistency and irregularity does not usually arise within the particular legislation or regulation that is created (although this does sometimes happen).  Rather, not enough consideration and thought is given to the effect of that legislation and regulation on other legislation, regulations and practices.  Put another way, we don’t take a sufficiently wide and higher view of what is trying to being achieved and how that fits into the existing structures and how it relates to other objectives.

One example that comes to mind is the current policy with respect to activity centres.  This policy was supposed to assist in the development and expansion of our shopping centres.  In Western Australia, we have some of the smallest shopping centres in Australia.  On the eastern seaboard there are many very much larger shopping centres that offer significantly greater amenity and variety.  The current policy in Western Australia is to allow this development provided certain conditions are met.  These conditions centre around transport hubs and density of residential development.  However, these expansions cost significant amounts of money that need to be recouped through rent and other usage charges.  This would be achieved by allowing as much trade as reasonably possible.  This is where our retail trading laws are at odds with this activity centre policy.  If the centre is outside the designated trading precincts, there is a restriction on trading hours.  This then affects the ability of the centre to repay the capital investment in its expansion.

There is also a social argument in this.  Activity centres by their very nature and name are supposed to be centres of activity.  How can they be centres of activity if they are closed particularly on Sundays?

Experience around the world shows that where there are areas of quite intense activity, they are safe environments.  A transport hub that is not isolated but located within a vibrant activity hub is far less likely to be a crime spot than one that is not.  The recent attacks by juveniles on members of the public in some of our train stations in the southeast corridor is a good example of this.

In addition to the clash of laws there is the clash of policy between governments and government departments.  Continuing with the shopping centre example, Westfield wanted to develop the Whitford Shopping Centre utilising the state’s activity centre policy.  In this regard, Westfield ticked all the boxes.  However, the City of Joondalup has a policy that activity centres should be focused in the Joondalup City precinct and this was one of the reasons why Westfield’s application for the development of the Whitford Shopping Centre as an activity centre was refused.  This makes a mockery of the activity centres policy.

In our City of Perth we have had healthy and robust debate as to the development of the city.  However, all development within the city centres around the plot ratio that is allocated to a site.  It is possible to transfer plot ratio entitlements from one site to another.  However, there are limits as to the amount and effectiveness of this ability to transfer plot ratio.

In my opinion, what we are really after within the city is the most effective use of space.  Why can’t developers put forward their proposals for a development site and have them assessed on their merits - what the project brings to the city, how it enhances the city, the quality of its architectural design?  What does plot ratio have to do with these outcomes?  Plot ratio has not been used in the development of many of the world’s major cities such as New York.

Construction in the city is very expensive.  Developers need to be able to get the best return they can for their development site.  The plot ratio approach is recognised as being a significant contributor to the lack of architectural innovation in the city.  The rectangular box allows the maximum use of the developable area allowed by the plot ratio policy.  If we had a policy that rewarded innovative use of space, good design and architectural originality and innovation, how much better would our city be?  Again, is our current policy at odds with development outcomes that we are seeking?

Some of the regulations with respect to the provision of services such as water and power can add unnecessary expense to a development.  If a development site is developed on a strata title basis that includes more than one building, the developer only needs one water connection to service the whole site.  These water connections are very expensive.  If the same site was subdivided into separate freehold sites, a separate connection would be required for each freehold site.  Both developments would have the same number of buildings - but one is more expensive in respect of the provision of water services.  Why can’t we have services that service a precinct rather than each individual building in a bid to reduce costs and assist in the development of land?

The development policies of the respective local authorities should be harmonised.  Too often, the policies of adjoining local authorities are not in synchronisation.  The result is negative consequences for each local authority.  The industrial area in the Kewdale - Welshpool precinct is a good example.  There are at least two local authorities that have jurisdiction in this area.  Yet, the quality of development within one local authority if markedly superior than the other.  This is simply because of different planning policies.  One authority has allowed an office component to be included within the industrial developments and the other has not.  Does it not make sense that an office component that assists in the commercial operation of a commercial site be located on that commercial site?  This is both an efficient use of space and promotes better overall amenity.  Some of the developments in this precinct are world class.  Others in this industrial area are along way short of this level.  If the relevant local authorities had a more harmonious and cooperative approach to this precinct, a lot of these incongruities would be avoided.

Strata titling is a relatively modern phenomenon.  It was created to deal with residential accommodation.  However, it has been more recently applied to commercial buildings.  The concern I have with this approach is that this gives rise to a multiplicity of owners.  In order to undertake major refurbishments, upgrades and redevelopments, the consent of these owners (whether by resolution without dissent or unanimous resolutions) mean that these decisions are often not made or are made far too late.

An example of how this process has inhibited development is the strata titling of the various red brick flats on Terrace Road.  This is prime real estate.  The strata titling process has held back the proper development of this area by at least 20 years.  These old developments were strata titled to deliver short term profits to owners.  However, there has been long term pain in the gradual dilapidation of many of these buildings.

The strata titling of significant buildings in the CBD has the potential to create future slums.  In other countries (such as Singapore and the United States) there are less stringent rules to allow redevelopment.  I accept that this is interfering with fundamental property rights.  However, if a significant building cannot be properly upgraded or redeveloped, the social consequences are significant.  Again, this is the application of a law that is not necessarily in the best interests of the good commercial development of our land.

These are but a few examples of this lack of integration of our laws and regulations.  There are many others.

What is required is a greater cooperation between local authorities and governments so that each compliments the other.  We need to take a more high level view of our laws and policies to make them work more cohesively and ensure they promote (and do not inhibit) the achievement of our development goals.

For more information, please contact:

Peter Beekink
Partner
(08) 9288 6751
peter.beekink@lavanlegal.com.au