Space matchmaking service for start-ups takes off

Renew Adelaide delivered $3.90 in local benefits to business for every dollar spent last year while breathing new life into vacant buildings. Is Renew Adelaide a good model for other cities to follow?

The Property Council’s Future Directions committee in Adelaide thinks so.

Established in 2012, Renew Adelaide is a not-for-profit with funding from the Adelaide City Council and Renewal SA that supports local ventures with flexible rent-free tenancies within the Adelaide CBD.

The model, which has also been embraced by other cities including Newcastle, Townsville and Geelong, operates two databases: one of available spaces with willing landlords; the other of start-up businesses looking for space.

“Renew Adelaide acts as a ‘matchmaker’ to ensure the perfect fit between a tenant and landlord,” says Tim Halliday, project and development manager with Trice and member of the Property Council’s Future Directions committee.

The Renew Adelaide team makes the initial introductions, helps with lease agreements – usually a rolling 30-day licence – and offers support during fitout phase and once the business is operational, Halliday explains.

“The numbers speak for themselves. Last financial year, 53 small businesses got a foot in the door through Renew Adelaide, and more than 2,200 sqm of vacant space was activated.”

Analysis from Deloitte has found the $1,868,000 in net benefits delivered over the last financial year translates into a 3.9:1 cost-benefit ratio – up from 2.4:1 just a four years earlier.

The growth trajectory confirms the model’s success, says Callan Cox, managing director of construction company Mykra Pty Ltd.

“The model is reframing Adelaide’s cultural identity. It supports urban renewal and activation of vacant tenancies, attracts local creatives and cultivates entrepreneurism,” Cox explains.

“It provides opportunities to people who might not otherwise test their business idea commercially, as the 30-day rolling license model is a less daunting commitment for the tenant and gives the landlord flexibility.”

Landlords have found that working with Renew Adelaide can increase foot traffic, Cox adds.

“In some cases, building are no longer looked upon as vacant – or even derelict – spaces, which can uplift the entire building. Landlords are increasingly able to translate Renew Adelaide tenants into commercial leases over time.”

While the Future Directions committee applauds Renew Adelaide’s efforts, it also acknowledges that may businesses fail to thrive, despite the helping hand.

“We have seen some tenancies return to their empty state. The spaces that tenants are typically moving into are handed over as ‘cold-shells’ and this can create difficulties for both parties as landlords try and maintain the standard of their building design and fitout, while tenants try to minimise their capital investment,” Halliday explains.

But there has been remarkable improvement in conversion rates over time as Renew Adelaide has learnt from its success and failures, Halliday says, pointing to Deloitte’s research.

Renew Adelaide: A growing success story

Financial year

Number of projects launched

Commercial leases signed

Percentage of successful projects

2015-16

30

6

20%

2016-17

26

10

38.5%

2017-18

25

12

48%


While Renew Adelaide encourages utilisation of empty space, does it in turn just create other empty spaces?

“The ‘what if’ question certainly orbits the Renew Adelaide model, as it does with all taxpayer funded models. Is this the highest and best use of the space and our taxpayer money? The evidence points to a great economic return. Our streets are more vibrant. And we are encouraging landlords and start-ups to work together towards mutual success and fantastic cultural outcomes,” Cox adds.

“Given the outcomes demonstrated by Renew Adelaide, we expect this model to be taken up in new precincts and other markets as other cities look to take advantage of this growing success story.”