Michael Bleby and Nick Lenaghan
Commercial office owners are frustrated that their needs are not being accounted for in the debate over resolving the combustible cladding crisis.
Owners of the buildings, such as the 5000 offices covered in the Property Council’s Office Market Report, also have to manage the rectification of their assets built with combustible and potentially dangerous material, but are hampered in doing so by the lack of a national approach, which many owners with national property portfolios want.
“It’s one of the issues we have all the time – the lack of uniformity in rules and regulations across the country,” said Dexus chief executive Darren Steinberg on Wednesday.
“Whether that’s retail leasing legislation or whether it’s issues such as cladding. It would be far simpler for there to be one set of unified rules in a variety of matters when it comes to real estate across the country.”
Unlike the fragmented residential sector in which owners corporations manage buildings and make decisions on them, commercial property owners have generally been quick to assess the extent of their own cladding liability and work out rectification strategies.
But they are hindered by uncertainty about what level of rectification will be deemed acceptable – and run the risk that a fix they make now may be deemed insufficient at some future point.
“The onus of responsibility is on the owner to determine what they think is acceptable and lodge [planning] applications,” a person at another large REIT said. “But there’s no firm guidance as to what building owner should do.”
While building ministers meeting in Hobart on Thursday have two agenda items to discuss, combustible cladding – driven to greater urgency by this week’s fire at the Neo200 building in central Melbourne – of office buildings are not a high priority.
“I’m happy to have that matter raised,” Victorian Planning Minister Richard Wynne said this week, when asked about commercial property.
To be fair, offices with combustible cladding are less of a risk to life than residential buildings.
“Commercial building stock is a different category, less vulnerable,” Victorian Cladding Taskforce co-chairman and former premier Ted Baillieu said this week. “There tend to be single owners. And single owners are moving quickly on their own account to deal with commercial buildings.”
They are – Dexus, the landlord of Mr Wynne’s own office at 8 Nicholson Street in Melbourne, is currently replacing the polyethylene-core panels on the building. Mr Steinberg said rectification works were underway on other assets also, but declined to be specific.
“I think you’ll find from an industry perspective there is a lot of this cladding in the office and industrial and possibly the retail sector across the country,” he said.