White elephant fears: Concerns raised over financial viability of $102m Civic Precinct

The “financial viability" of the city’s huge new civic precinct could be “compromised” amid tenancy and land sale worries.

The City of Greater Geelong’s Civic Precinct project is at risk of becoming a $102m white elephant, with the city unable to confirm whether it has found any tenants for the building nor whether it has sold land earmarked for a second tower.

And the council’s finance chair has warned the “financial viability” of the project is “compromised” as a result of tenancy targets being missed.

The city is expected to begin transferring staff into the new six-storey Wurriki Nyal building from August, as the expensive Mercer St project nears completion.

The City of Greater Geelong’s Civic Precinct project is at risk of becoming a $102m white elephant.

But, the city this week could not confirm whether it has found any tenants for 2200sq m of office space or multiple ground floor retail tenancies in the building – with the income from tenancies expected to offset costs of the major project.

“We are engaging with a number of potential tenants and are actively seeking tenants for our retail and office spaces,” city chief executive Martin Cutter said.

And neither the city nor its project partner Quintessential Equity (QE) would confirm QE had purchased land at 20 Gheringhap St to build the planned office tower pitched as part of the major project – the sale of which was also set to bolster the city’s coffers.

The organisations’ silence on the sale also came as both the city and QE declined to say whether the sale of the land had been deferred.

“Quintessential Equity remain a committed partner in the development of the precinct, however we are unable to comment on contractual matters between the City and Quintessential Equity,” Mr Cutter said.

The City of Greater Geelong’s Civic Precinct project is at risk of becoming a $102m white elephant.

A QE spokesman said the matter was “currently commercial in confidence”, but suggested “more information” would be available on August 1.

The Civic Precinct project has headlined recent record capital works spends for the city’s recent budget deficits, with the $379m earmarked over the past two financial years described as an “unprecedented level of spending” by city leaders.

But councillor Anthony Aitken – who has previously warned against the city’s ownership of the building – said the financial viability of the project needed to be questioned.

“As chair of the finance portfolio at Council it disappoints me that the financial sustainability of the new admin building is compromised because the promised tenancy targets have not been met,” Cr Aitken said.

“The Council officers ultimately accountable for this financial concern have resigned (Martin Cutter and Michael Dugina). It is my belief that the financial viability of the new admin building will need to be referred to the new CEO as a priority when that person is appointed.

“If the tenancies can’t be met and Stage 2 Quintessential development does not proceed, the project will be a major burden on the Geelong community.”

Cr Aitken and Cr Eddy Kontelj have both previously voiced concerns about the financial viability project.

“You don’t have to be Einstein to know that, in the short term, [leasing out office space] probably will be a challenge,” Cr Kontelj said earlier this year.

Originally published as White elephant fears: Concerns raised over financial viability of $102m Civic Precinct