No cash up front as developer takes over CBD
The major property player granted exclusive rights to develop the Coast’s city centre won’t have to pay any cash up front.
Sunshine Coast
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The major property player granted exclusive rights to develop the Coast's city centre won't have to pay any cash up front.
Sunshine Coast Council has signed a development partner agreement with Walker Corporation for the $430 million Maroochydore City Centre.
Mayor Mark Jamieson said the "very carefully considered" deal meant Walker would construct buildings and civil assets such as roads and gardens at the 53ha site over the next 20 years.
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Walker will use its national and global contacts to attract businesses as tenants, which the council estimates will result in a $2.5 billion investment.
While the company did not pay anything upfront to partner in the development, Cr Jamieson said the council would eventually earn a profit from it.
The council estimates it will break even on funds spent to date on the development by 2035 and earn a $41 million profit once the project was completed.
Under the agreement, the council will take a share of profits from the lease or sale of buildings.
The council said the percentage of the profits they will receive from the project is commercial in confidence and cannot be released.
"We expect council to break even by 2035, that's 10 years earlier than originally anticipated," Cr Jamieson said.
"With an overall profit of about $41 million it's not bad when you consider this project when it was first commenced was estimated to make a $50 million loss.
"After I was elected we thought we need to make this cost-neutral."
The profit estimates are based on the $179 million council and its wholly owned development subsidiary SunCentral have spent on purchasing land and construction.
It does not take into account the council's $59 million city hall, one of four buildings already locked in for the greenfield site.
SunCentral CEO John Knaggs said Walker Corporation would bring a range of skills including its ability to attract tenants and conduct commercial negotiations.
"One of the great challenges council and SunCentral has had in terms of attracting major corporates to this project is that we can't develop and design buildings for those corporates to go into," Mr Knaggs said.
"Their ability to conduct commercial negotiations … and around leasing purpose built and designed buildings, that's their skill and expertise and that is so critical for this project."
Cr Jamieson said the council would reassess the roles of SunCentral staff and board members between now and July next year.
"Clearly there's no point in both parties doing the same thing, so there will need to be a realignment of roles and responsibilities," he said.
Walker Corporation's commercial manager for Malaysia and development projects, George Quinn, said the scale of the development and the arrangement, with council owning the land until the project was complete, was attractive.
Mr Quinn said the company would lean on existing clients at its other developments, such as government agencies, banks and other major corporates to secure tenants for the city centre.
Walker will also establish an office in the city centre and hopes to start construction soon.
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