Preaching for the converted: Triguboff calls for city overhaul

Multibillionaire Harry Triguboff has called on state and federal governments to help landlords left with vacant office blocks to convert them to residential units, saying it’s unlikely many workers will ever return to full-time office work.

Mr Triguboff’s Meriton Apartments has converted two office blocks into apartment buildings and while he is unlikely to participate in more residential conversions he says this type of activity could help solve the residential housing crisis besetting Australia.

“Banks like to lend on office buildings,” Mr Triguboff says. “The only way they (office blocks) are built is because the government signs leases and the banks are happy to oblige. We should change old offices to units,” the veteran property developer told The Australian.

“There are many offices which are empty. All the owners have lost money. It just happened. Make it easy to convert the offices and help the owners. Make (planning) codes easy for them, give these owners very cheap finance.

“Workers don’t want to come to work like they used to. We must face reality. Building for the government offices for workers to have great luxury is nonsense. Do they have luxurious conditions when they work from home?

“It’s not the owner’s fault … (but) the government should step in and help.

“They have to accept … office blocks are useless.”

Mr Triguboff argues that if the housing crisis is fixed then office demand will rise automatically. “But we must move quickly,” he warns.

The billionaire’s comments come as major office towers along the eastern seaboard hit the market, with only the best offers expected to fare well.

The sales are being driven by listed companies and institutions looking to cut their gearing amid uncertainty over office block values, which Mr Triguboff warned is an increasing problem. He says it is increasingly impossible to value vacant office blocks and he argues that is why governments should step in.

The sector is also under more pressure from lenders concerned that values have shifted down. At the same time, foreign buyers are cashed up and looking to Australia as a safe haven, with some looking to convert sites in the same way the Meriton boss has in mind.

Many office buildings have lagged the falls that hit large shopping centres during the Covid crisis. But prospective buyers now expect that vendors of offices will meet the market rather than hold on to them.

Billions of dollars worth of offices hit the market last year but relatively few buildings sold, as big commercial landlords held the line against discounts. The few sales that went through showed some price decline, particularly in suburban markets for lower-grade assets.

Now real estate companies are quietly marking down the value of assets they wish to dispose of, partly in order to be in a position to strike deals.

*The story by Lisa Allen first appeared in The Australian.