[COM] Rundle Place | 76m | 15lvls | Retail & Office

[Will]

The start date for this project was meant to be May 2009. What's going on?

Make an educated guess.

[monotonehell]

You'd think considering our available office space is one of the lowest of the capitals and is still decreasing and our rental prices are on the rise that there would be an increased demand for new office space? Or is that the wrong way to determine demand?

So what you're saying is that since there's a limited supply that creates more demand? Not quite how it works.

It works several ways, but basically demand tends to be fixed by what's required in the market and supply is fixed by what developers and landlords decide to put on the market. Price is derived from demand and supply; if there's a high demand and a low supply then prices can be high, high supply and low demand tends to drive prices down.

What tends to happen in the Adelaide market is developers try to keep the supply down (and therefore prices high) by only releasing floorspace onto the market to a point where it only just meets demand. If developers did what a lot of people who post on this forum and built huge skyscrapers, there'd be a glut of supply, with the same amount of demand, therefore devaluing the price of floorspace. Investors would not like the drop in returns, so it doesn't happen.

[Briggzy_03]

You'd think considering our available office space is one of the lowest of the capitals and is still decreasing and our rental prices are on the rise that there would be an increased demand for new office space? Or is that the wrong way to determine demand?

So what you're saying is that since there's a limited supply that creates more demand? Not quite how it works.

It works several ways, but basically demand tends to be fixed by what's required in the market and supply is fixed by what developers and landlords decide to put on the market. Price is derived from demand and supply; if there's a high demand and a low supply then prices can be high, high supply and low demand tends to drive prices down.

What tends to happen in the Adelaide market is developers try to keep the supply down (and therefore prices high) by only releasing floorspace onto the market to a point where it only just meets demand. If developers did what a lot of people who post on this forum and built huge skyscrapers, there'd be a glut of supply, with the same amount of demand, therefore devaluing the price of floorspace. Investors would not like the drop in returns, so it doesn't happen.

Thanks for clearing that up Mono. I thought it wasn't that simple

[joshzxzx]

So in effect the government needs to increase demand by possibly reducing payroll tax and other stupid taxes which may lure big business who can set up their base here. Thus increasing the level of demand in offices..

Once this has been established, then we may see higher and shall i say it, sexier buildings..

[frank1]

So in effect the government needs to increase demand by possibly reducing payroll tax and other stupid taxes which may lure big business who can set up their base here. Thus increasing the level of demand in offices..

Once this has been established, then we may see higher and shall i say it, sexier buildings..

i find it strange the way people claim if the gov dropped payroll tax etc 'big business' would magically come to adelaide. I don't see it happening as melbourne is too close to adelaide and has a monopoly over SA.

[monotonehell]

So in effect the government needs to increase demand by possibly reducing payroll tax and other stupid taxes which may lure big business who can set up their base here. Thus increasing the level of demand in offices...

What usually happens there is the landlords increase their rents to absorb the discount on their books as extra income.

You can't really induce demand that way, you need a more attractive reason to set up business here. Bribing businesses to set up shop in your backyard usually backfires, they just get the handout mentality (as witnessed by several misfires here in SA and things like tariff protections). Charity doesn't work, you need real stimulus -- which is a hard thing to engineer.

[Omicron]

I was in Harris Scarfe today.

What a dreadful rabbit warren.

[thechap]

i find it strange the way people claim if the gov dropped payroll tax etc 'big business' would magically come to adelaide. I don't see it happening as melbourne is too close to adelaide and has a monopoly over SA.

That's not all Melbourne has over Adelaide. But we've had that disucssion a million times before in this forum...

[Hooligan]

I was in Harris Scarfe today.

What a dreadful rabbit warren.

Did it remind you of Are you being served?

[joshzxzx]

in response to..

So in effect the government needs to increase demand by possibly reducing payroll tax and other stupid taxes which may lure big business who can set up their base here. Thus increasing the level of demand in offices..

Once this has been established, then we may see higher and shall i say it, sexier buildings..

i find it strange the way people claim if the gov dropped payroll tax etc 'big business' would magically come to adelaide. I don't see it happening as melbourne is too close to adelaide and has a monopoly over SA.

Why business avoids SA
Article from: The Advertiser

DANIEL WILLS, POLITICAL REPORTER

December 30, 2009 11:50am

INVESTORS will keep bypassing South Australia and spend millions interstate unless the tax system is overhauled, industry leaders warn.

In the wake of an Institute of Public Affairs study which found SA business is slugged with the highest tax bill in the nation, business leaders and developers have called for reform to payroll and land taxes.

Business SA chief executive Peter Vaughan said low payroll tax thresholds stopped small business from expanding. "The burden of taxation generally makes us more uncompetitive," he said.

"We're hoping that that's something that will be addressed in the election round that's coming up."

Property Council of Australia SA chief executive Nathan Paine said the state was "on the cusp of a great period" but held back by the highest rate of land tax in Australia.

"When you're looking to invest serious dollars into property and your land tax bill in South Australia can be up to half a million dollars higher than in Queensland, that is going to make you pause and think," he said.

Figures released yesterday by the Institute of Public Affairs show the average medium-sized business in SA is taxed $247,437 each year.

Research fellow Julie Novak said the Government "urgently" needed to cut property taxes.

Ms Novak also said many businesses were penalised by the Government's "failed policy of picking winners" and handouts to favoured industries.

"It is deeply concerning that Treasurer Kevin Foley recently nominated industries such as defence, mining and renewable energy as targets of future handouts," she said.

"Such an approach distorts the local economy and actually costs non-beneficiary businesses through higher taxes.

"A better way to build the state would be to cut state taxes, attracting investment and cultivating a long-term sustainable revenue base."

Acting Premier Paul Holloway said "the Government always reviews its tax structures" but refused to commit to immediate changes.

He also questioned the integrity of the IPA, a self-described "free-market think tank".

"They have a particular philosophy in relation the the work that they do," Mr Holloway said.

"You can conjure up statistics to prove anything you like if you want to."

Opposition finance spokesman Rob Lucas said the Liberals would abolish tax for land valued below $250,000.

[Will]

The above article doesn't really prove anything. Business unions such as Business SA are always going to complain about taxes. We could have the lowest taxes in the world and I imagine such pro-business organisations will always be campaigning for tax cuts, privatisations and reduced entitlements and pay for workers.

[joshzxzx]

I completely agree with your comment Will.

I merely just think that we as a state can and should do more to help attract big companies to establish their HQ here...

[Prince George]

I completely agree with your comment Will.

I merely just think that we as a state can and should do more to help attract big companies to establish their HQ here...

The "attract big companies" thinking tends to become a race to the bottom. These companies are parasites, they are mobile enough to go where the costs are lowest and they play one location off against another. And I've been seeing more literature recently about the clustering effects of the global economy - the headquarters for industries are tending to group together rather than spread apart, and in Australia that means in Sydney where practically all of the corporate headquarters in our region are clustered. Saskia Sassen devotes a significant amount of time on this in Cities in a world economy, on the couple of decades that saw the change from Melbourne being the principal corporate city to Sydney (in chapter 5).

I'm still more interested in producing new businesses locally than in trying to pull others in from outside.

[pushbutton]

Well Toyworld is now moving out of Harris Scarfe and into the Myer Centre.

Could this be a sign that maybe things are about to finally start happening? Oh, of course not. Silly me. That must be years off yet as the original start date wasn't even a year ago!

How silly of me!

[deano91]

I work in the 3 Dealer in the front of Harris Scarfe and we haven't been told anything about what is going on with this yet. I'm sure our boss is probably in the process of weighing up our options for when the store does close, but for now he hasn't passed on any information to us.

In a way I don't want this to go ahead because it would threaten our hours or maybe even our jobs, but at the same time I do want it to happen because it is such a great opportunity!