Canberra’s CBD is in flux amid a fear of stranded office assets. Photo: Ian Bushnell.
Property developers want tax breaks! That’s hardly breaking news.
It won’t surprise anyone in Canberra, and there are few who would have sympathy for developers whinging about how difficult it can be to make a buck in this town.
It’s why the Barr Government can be “tone deaf”, as a property industry figure said at a recent event, when it comes to pleas for the hated lease variation charge to be axed or reduced.
The LVC’s purpose is to provide the community with some of the uplift in value that a lease change can bring to a piece of land.
In a jurisdiction where land is currency, few argue that windfalls from a change in use should not be taxed.
Except for the property industry, which has waged a relentless campaign against the LVC because it is seen as a blunt instrument that is impeding not just development, but innovative development.
It argues the LVC impacts the viability of projects, limits a developer’s options, and increases the cost of housing.
The latest call for LVC to go came last week from Canberra Airport’s Richard Snow at a Property Council event in a discussion about the CBD and the number of vacant buildings being left behind as new A-grade offices demanded by tenants, particularly the Commonwealth, are delivered.
As the city emerges from its current construction frenzy, the last thing anyone wants is a bunch of stranded assets or ”zombie” buildings detracting from the likes of light rail Stage 2A, the Lyric Theatre and the new hotel in Garema Place.
Mr Snow said the city should be declared an LVC-free special economic zone to attract developer interest in adaptive reuse of office buildings.
The government wasn’t raising any LVC there anyway, so there was nothing to lose, he said. But plenty to gain in the form of repurposed and new buildings, more residents and ratepayers, and a more vibrant CBD.
Overall, LVC raised just $12 million in 2024-25, is now expected to raise $29 million this financial year, and in 2026-27 about $32 million before declining to $26 million in 2027-28 and $24 million in 2028-29.
In the context of total revenue of about $3 billion, according to the Budget Review, it really is a drop in the bucket.
Canberra Airport’s Richard Snow says there are too many barriers to repurposing buildings. Photo: Property Council.
But the Commonwealth also has a responsibility, given that its new office requirements are why some buildings are being left behind.
It could provide compensatory assistance to the Territory to support adaptive reuse, for example, through the Housing Australia Future Fund.
Mr Snow did not mention this, but the other reason for giving developers some incentives is that adaptive reuse of office floor plates for residential use is not an easy task and will be costly.
Balconies, plumbing and wiring are just a few of the challenges. For some, it may be easier to knock them down and start again.
Everybody wants a CBD that is a beating heart. The property industry concedes that offices cannot do this alone, especially when so many government departments are heading to Barton.
With UNSW Canberra expanding in the city’s east, it sees an opportunity for more student accommodation in the CBD, along with other residents.
The government also wants more residents in the city — a dynamic mix of students, essential workers, young professionals, families and older right-sizers.
There is alignment.
The government has already said it is prepared to relent on LVC in special circumstances, in exchange for the provision of community facilities, and just last week in the Budget Review it announced discounts for social and affordable rental housing.
It’s not that much of a stretch to extend that to the CBD as part of an overall plan to keep the city alive, not let pockets of decay emerge.
It’s worth a try.
