Sunday, 2 June 2019 2:00AM
Prolific property investors holding millions of dollars’ worth of real estate are the landlords of properties where businesses are collapsing the length of Beaufort Street.
When popular wine bar Clarence’s took to social media this week to explain its shock shuttering — the latest in a string of closures that has also claimed Five Bar, Harvey Leigh’s Public House, Red Cray, Pancho’s Mexican Villa, Peaky Bodega and Cantina 663 — it blamed the “greed and ignorance of landlords.”
But while long-standing Beaufort Street proprietor Bruno Zimmermann, the owner of the iconic Astor Theatre and Astor Arcade, agrees landlords could be contributing to the decline of Beaufort Street, he insists the gold medal for blame should be awarded to government — State and local.
Mr Zimmermann, a German migrant, believes skyrocketing land tax and utility bills — which he says owners have no choice but to pass on to tenants — are just as big an impost for business owners as rent.The once-thriving Beaufort Street is struggling.Picture: The West Australian
“(While there may be) some greedy landlords, the most greedy people are the government,” Mr Zimmermann said. “Three years ago we paid $40,000 in land tax on the Astor and today it is $56,000. That is another $16,000 I have to pass on to the tenants.”
He said council rates and water and electricity charges had also spiked over the past four years and that for many of his tenants the cost of outgoings was now close to equal that of rent.
Astor Arcade tenant Cantina 663 made headlines earlier this year when it fell over after more than 10 years of trade but Mr Zimmermann, a former TheWest Australian photographer turned property mogul, insisted that closure had nothing to do with rent.
He declined to go into the details — the eviction came after a protracted legal battle — but said the fact Cantina 663 was the only tenant he had lost demonstrated his approach was fair and sustainable.
“My tenants on average pay $350sqm per year, which is half the going rate other people around here charge,” he said.
Mr Zimmermann claimed that when things started picking up on Beaufort Street he was being criticised by some landlords for keeping his rents low.
Jeweller Lisa Branco, owner of Estrela inside Astor Arcade, heaped praise on Mr Zimmermann for his willingness to keep rents low and work with tenants but said other factors meant it was not plain sailing for tenants.
“There was 11 weeks recently where I had not one customer walk in. I had my clients booked in ... but no foot traffic,” she said.
Growing from a home business, Ms Branco said it made her question why she had progressed to an established business that she had to pay rent on.
Less than 200m down the road, a bold red sale sign is the first thing you see outside popular furniture and homewares store Baker & Shuhandler Interiors. After 13 years on the corner of Beaufort and Vincent Street, business owner Sam Shuhandler said financial pressure had peaked.
“It’s a combination of things. The economy isn’t performing very well and the high rent. It’s getting a bit out of control,” Mr Shuhandler said.
Mr Shuhandler said he had tried to negotiate with his landlords over rent multiple times to no avail.
“Had I signed for an extra five years they said they would try to do something for me but in this economy why would you do that?” he said.
“The foot traffic is going down as well here. There’s not enough diversity in businesses. We’ve lost a bit of the community.”
On the opposite side of the strip, seafood restaurant Red Cray shucked its last oyster in March.
The Second Avenue building it called home for more than a decade is owned by Allan and Lynette Erceg, who boast award-winning Swan Valley winery Mandoon Estate as the jewel in their impressive property crown.
The Croatian-born Mr Erceg — who also runs his own pubs and is well versed in the expenses of hospitality — said simply pointing the finger at rents for Beaufort Street’s woes was too simplistic.
“You could completely eliminate rents out of the equation and some businesses would still close because unfortunately not everyone does their homework,” he said.
He believed Red Cray’s troubles began after it switched hands from the original owners to a new operator not as well versed in the overheads of the business.
“Employment costs are very high, especially with the penalty rates that come into play with hospitality,” Mr Erceg said.
“Food costs are also high and a lot of the operators that I have come across in recent times are under resourced and struggle with cash flow.”
He said it was important that operators put some revenue away for a rainy day.
Mo & Jo Furniture owner Mohan Vig moved into Beaufort Street nine months ago, just in time to book a front row seat to the strip’s decline. He admitted failing to do his research and struggling to keep up with rent of $60,000 per year.Sam Shuhandler has felt the Beaufort St struggle.Picture: Ian Munro
“There’s no foot fall at all. It has become the ghost town like what Subiaco was at one time,” he said.
The owners of Beaufort Street property are just as diverse as their tenants and while some possess sprawling portfolios including apartment complexes, warehouses, office space and homes, that is not always the case.
Ray White commercial consultant Brett Wilkins said dropping rents to help out tenants was not an option available to every owner, some of whom might have bought at the peak of the rent and value cycle.
“The banks are saying ‘pay your mortgage’ to these guys too,” he said.
“There is no one great landlord that owns big swathes of Beaufort Street. A lot of them are mums and dads and what is lost in this whole argument is that landlords also have liabilities and expenses. Some might even have their own personal homes on the line.”
Mr Wilkins said all popular strips suffered from cycles and that Beaufort Street’s fate was sealed as soon as it became popular enough to start attracting the attention of chain stores and multinationals.
“These strips all start off with relatively cheap rent which allows boutiques and trendy shops, bars and cafes to move in,” he said. “But as they become successful the franchises and national chains move in, which both drives up rent and means you lost some of that trendiness and exotic appeal.”
One man who has seen the dramatic downfall of Beaufort Street’s social culture is The Flying Scotsman manager Wade Tregonning.
Having served in the role for the past eight years and spent many nights having one over the wood as a young bloke, Mr Tregonning is oozing with love for the place.
Sadly, he said those glory days seemed long gone. When asked how business was going, Mr Tregonning simply said “it could be better”.
“Around four years ago things started to change. Things are starting to quiet down a bit,” he said. “We’re suffering on this strip at the moment. It used to be a big precinct now it’s just a few pubs here and there. They’re calling us Subi 2.0 at the moment.”
He said landlords often refused to budge on rent — including his own — but said there was plenty of blame to go around.
“I don’t think the City of Vincent have paid much attention to this strip in a while,” he said. “The council has a lot more work to do.”
Just celebrating their fourth birthday in Beaufort Street, Travel & Sports Australia marketing manager Callum Chambers said there was a lot to love about the neighbourhood but more needed to be done to activate the area.
He said businesses had started coming up with their own forms of activation in lieu of action from the council, which this week also committed to ploughing more resources into luring visitors back.
“The people up and down the street are doing what they can to bring in business, not just for our own sake but for others,” Mr Chambers said.
“It’s always better to see things packed and full and people enjoying themselves.
“Over the past few months in particular we’ve had the road works, which hasn’t helped. That’s generally made things quieter than they usually would be.”
Of course, there is always those like Neil Thapaliya who are willing to take a punt on themselves.
Having opened and sold Nepalese restaurants across the city Mr Thapaliya said he was “looking for something good” and his latest venture Everest58 on Beaufort Street — which opened on Wednesday — ticked the boxes.
“I’ve just signed on for five years. The landlord negotiated with me to reduce the rent. I have good rent now,” Mr Thapaliya said.