From strangers to business-partner-neighbours

Jul 21, 2023

Pictured: Abby and Joe from Good Cycles with two of the commercial space owners, Elissa and Andy.

In 2020, construction was underway at the major six-building project The Village in Brunswick. Many of the people who had recently purchased homes in The Village were now working from home under Melbourne’s strict lockdown conditions, catching up with each other over Zoom at regular Nightingale resident meetings

Kate and Dave, owners of a home in Nightingale Evergreen, began chatting to their future neighbours Kath and Andy about the commercial properties that would feature in the ground floor plan for the precinct. They began asking themselves, ‘What if a group of us combined forces to purchase a commercial space?’ “Then Kath and Andy started to have conversations with some others,” says Kate, “and then the conversations just kind of rippled around.” Eventually they’d established a collective of 14 people keen to jointly invest in a commercial property.

Ronan and Elissa from Nightingale Leftfield were part of the group. Elissa says, “We were all really interested in how we could create opportunities for social enterprises or other projects trying to do good in the world, by providing a reduced rent.” Ronan adds that they hoped this initiative — and others that might follow — could help remedy a negative aspect of development in the area: the loss of cheap factory spaces repurposed as workshops and studios. “As amazing as Nightingale is,” he says, “it is part of gentrification. So we hoped that we could bring somebody into The Village who might not otherwise be able to afford to set up shop here.”

Before the group could consider prospective tenants, they had a lot of organisational work to do. Kate says, “It was critical, right from the beginning, to make sure that everybody agreed on why we were doing this.” They held a series of workshops to clarify their collective purpose. “What we worked out was we were all prepared to have a reduced return on our investment, in order to subsidise the rent for the tenant.”

The concept of a for-purpose commercial property was straightforward to the collective, but, Kate says, “Accountants and lawyers did not understand.” Ronan adds, “The Nightingale Housing approach is an antidote to how the property market is structured, where incentives and levers at every level are geared towards homeownership as an investment vehicle. Similarly for the commercial tenancy, we were hearing from professionals, ‘I’m not sure how you’d do that. How would you offer it at below market rate? How does that affect the resale value?’”

After researching different models and approaches, the group decided to form a unit trust, with each investor holding a unit, or number of units. They eventually secured the documentation they needed to progress the venture, as well as formalising a decision-making process to guide the management of the property. Elissa says they rigorously documented the whole process, “hoping it’s something we might be able to help other Nightingale communities to create — now that we’ve navigated the tricky legal and accounting processes that don’t quite translate when profit isn’t your number one motive.” 

When it came to finding a tenant for the space, Ronan says a bike shop was high on the list for everyone. “In Nightingale buildings, people are getting rid of their cars, and there’s an emphasis on bike ownership. So somebody in the group suggested Good Cycles, a bike workshop which is also a social enterprise — and they’re the dream tenant for this space and The Village.”

The Retail Stock Supervisor at Good Cycles, Abby, says that the team was excited to work in The Village — they’d had their eye on Brunswick for a new shop, and a Nightingale space was a great fit with their values. The owners’ interest in the new tenant was an unexpected bonus. “Everyone has come in at some point to see how we’re going, which has been really lovely,” Abby says.

Now that the shop is open, the members of the collective hope that other resident groups — within the Nightingale community and beyond — will replicate their project. Kate recognises that part of the success of their collaboration is due to timing: it became a lockdown project. “We put so much work into it,” she says. “We had presentations, we had legal advice, we had the lease agreements, we had everything watertight and set up — and that cost a lot of money as well as time.” The benefit is that now they can share their expertise with other resident groups looking to own a commercial space. 

Elissa points to the diverse skills of the group a central part of their success. “We didn’t know each other, and because of lockdowns, we hadn’t even met in person a year into this process, so we wouldn’t have recognised each other on the street. But we’ve come together to work out if we could do this, for our Village. The architects in the group jumped in and helped Good Cycles with how to design the space. Others have really helped with how we make decisions as a group. Some people have been great with admin, and others have been great with accounting. We’ve drawn on our collective strengths to make it happen.”

“For a long time, success wasn’t a given,” says Ronan. “There was a lot of good faith, a lot of working together, and a lot of hoping it would all come together in the end — and it did!”

Read our Resident Story with Abby at Good Cycles.

Learn more about Nightingale commercial spaces.

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