Renew Newcastle: The Full Story

Renew Newcastle logo

This case study of Renew Newcastle - which has been successfully refilling empty shops in downtown Newcastle since 2008 - was adapted from Creating Creative Enterprise Hubs: A Guide by Marcus Westbury written in January 2010.

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What is the Renew Newcastle project?

Renew Newcastle was founded in late 2008 by creative thinker and entrepreneur Marcus Westbury in an attempt to get artists and creative projects into some of the growing number of empty shops and offices within the Newcastle CBD.

Despite the high number of empty spaces there was still a comparative lack of affordable spaces in which creative projects and initiatives could get started.

By the end of its first year, Renew Newcastle had initiated more than 40 creative enterprises and projects in what had been empty buildings.

The creative enterprises included art galleries, artist studios, web and graphic design businesses, small publishers, film and video studios, retail shops for locally made arts and crafts, fashion design businesses, a jewellery workshop, a milliner, and two photography studios and galleries.

By the end of 2009 Renew Newcastle had about 25 formerly empty spaces under management. Just as importantly, it had been the catalyst for renewed commercial investment in the area around Newcastle's formerly dilapidated Hunter Street Mall.

Renew Newcastle had widely been cited by property owners, business groups, media and politicians as having been responsible for a turnaround in a formerly rundown area of the city. Commercial tenants had returned to the area for the first time in years and Renew Newcastle was gradually moving into other parts of the CBD.

The History of Renew Newcastle

At the beginning of 2008 Newcastle had been hit badly by a large-scale version of a problem that was evident in many old main streets and town centres across Australia and around the world.

The old CBD of Newcastle had developed as a commercial precinct in the era of trams and public transport. The rise in car ownership and the construction of suburban shopping centres now meant that the old 'city centre' had ceased to be a desirable retail destination. Businesses had left the old city centre in favour of growing commercial shopping centres and office parks in outer suburbs.

Many buildings were empty and development projects were either stalled by the financial crisis or simply not viable. The city was emptying out and the old Newcastle CBD could no longer compete with the suburbs. The biggest symptom of this problem was that there were approximately 150 visibly empty buildings in the Newcastle city centre.

The sheer volume of empty spaces had reached the point where the decline had become self-perpetuating. It was attracting vandalism, violence and street crime. New businesses were reluctant to open in areas that had been in a spiral of visible decline for more than two decades.  

The not-for-profit company Renew Newcastle was founded to make some of these spaces available on an interim basis to artists, creative enterprises and community groups. In theory, this would benefit the projects that occupied those spaces and act as a catalyst for reactivating the city.

Despite a high level of interest from creative enterprises in accessing vacant spaces and examples overseas having shown that this could be a catalyst for urban renewal, the process did not begin organically in Newcastle. Artists and creative entrepreneurs reported that while there were high levels of vacancies, it was still comparably difficult to rent vacant spaces as the costs were prohibitive and the terms available did not match their way of working.

The Renew Newcastle model was developed in response to this problem.

Artists' patterns of working and the overheads involved in even long vacant buildings meant that the kind of initiative evident in the community was not matching the reality of the commercial property market. The market value of many of the buildings had fallen below the cost to their owners to use them. In many cases, buildings were worth more to their owners as losses and deductions than as going concerns.

An ordinary commercial lease - even a peppercorn one - created obligations and burdens on a property owner so great that it meant that there was a considerable cost in allowing low-cost activity despite obvious benefits to the city and, ultimately, to the property owner.

Renew Newcastle identified issues such as liability and insurance, tax and accounting ramifications (property values are assessed based on lease values so cheap leases can 'devalue' a property on paper), and increased maintenance costs as key reasons why these properties had become 'unleasable' for the kinds of market values that people were willing to pay for them.

Effectively, the rental values had fallen below an artificial floor, below which they could not be viably rented.

By putting in place a structure that brokered access to these spaces cheaply, Renew Newcastle was able to bring nearly 40 new creative projects and enterprises - both temporary and ongoing - back to the city in the first 12 months.

Within the first year, the initial area of the city targeted by Renew Newcastle - the Hunter Street mall - was transformed from an empty area in the city to a busy centre of creativity and activity. By the end of that first year, many new commercial tenants were opening, and activity and interest was returning to the mall at a level not seen in decades.

How Renew Newcastle Works

Renew Newcastle is a not-for-profit company limited by guarantee that describes itself as "a permanent structure for temporary things." It was founded independently of, but is now supported by, both state and local government.

Essentially, Renew Newcastle works directly with private property owners to 'borrow' buildings while they might otherwise be sitting empty and makes them available to artists, creative projects and community groups.

A key feature of the Renew Newcastle approach is that it is ongoing and temporary: it does not try to permanently occupy buildings, only to use them while they are empty.

All their projects are inherently temporary - although some can and do continue indefinitely - which means that the Renew Newcastle model is not suited to building permanent arts infrastructure or facilities. The model works best as a means of incubating new ideas and activities.

Licence agreements versus leases

In legal terms, Renew Newcastle doesn't lease the buildings but rather negotiates a licence agreement (a contract) that allows the 'creative projects' to access them.

An analogy is that Renew Newcastle asks for similar terms as those used when someone puts a mobile phone tower or a billboard on a building - the right to access it for a particular purpose on agreed terms.

Legally, this is important, as it does not trigger the statutory obligations, rights, costs and responsibilities for either party that are required for a lease.

As a result, the agreements are much easier for the property owner as Renew Newcastle asks for a lot less in the way of rights (and therefore causes a lot less hassles) than a normal leaseholder would.

Renew Newcastle drafts specific agreements for each property and allows the property owner to ultimately decide which specific projects they will host. While it can vary according to the circumstances, the default licence agreement allows the 'custodian' (each creative project) to use each building on a rolling 30-day basis.

The owner can give each project 30 days notice at any time should they wish to end the arrangement. This solves concerns of property owners about having to miss out on taking a commercial offer or selling the property should an offer come along.

The Renew Newcastle model has no 'opportunity cost' to the property owner for participating in the scheme.

In legal terms, Renew Newcastle, the property owner, and the project are all parties to a licence agreement that clearly specifies each party's responsibilities on a case-by-case basis.

In most cases, the property owner provides the property for a nominal sum until they wish to end the agreement.

Head licence agreement

 The Arts Law Centre of Australia's Sample Documents contains a template licence agreement between the administering body and property owners for the use of buildings. 

Participation agreement

The Arts Law Centre of Australia's Sample Documents contains a template participation agreement between the administering body and individuals/organisations whose project proposals are accepted for inclusion (program participants). 

Renew Newcastle contributes to taking care of the space and acts as a manager of the space.

The occupier agrees to keep the space clean and presentable, pay all outgoings associated with their occupancy (such as water, gas and electricity bills), to keep it open as required, and to take care of the building until the owner wants it back.

Any party can cancel the agreement with the appropriate notice.

Insurance

A suite of Legal Information Sheets and Agreements for Creative Enterprise Hubs in NSW, developed by the Arts Law Centre of Australia lays out the different types of insurances that may be needed by both administering bodies (such as Renew Newcastle) and by creative enterprises temporarily occupying empty spaces.

Renew Newcastle, for example, agrees to hold the relevant insurance (public liability insurance is always included, but in some cases some property insurances are also included). Program participants are covered under Renew Newcastle's umbrella public liability insurance policy. Some participants take out their own professional indemnity, workers compensation and contents insurance.

Benefits for artists and creative enterprises

Access to a space to work from, to sell work, to rehearse or to create is of immense value to creative projects that typically begin without much money.

Renew Newcastle has opened nearly 40 new creative projects and initiatives in the Newcastle CBD since the project commenced in late 2008 and in most cases these would simply never have got off the ground if Renew Newcastle hadn't created the opportunity.

In virtually every case Renew Newcastle has given an artist, a small creative business, or a creative community the opportunity to take a major step forward in what they are doing. They are often realising a long held dream to open a shop, start a gallery, set up a studio or take their work to the next level.

Benefits for property owners

Property owners can benefit from Renew Newcastle as much as, if not more than, the creative projects that use their spaces.

Having someone occupying the property provides immediate benefits for the property owner: it reduces vandalism, squatting and other problems associated with empty buildings; it can lower or even eliminate some maintenance costs; and it can lead to lower insurance costs as occupied properties are generally cheaper to insure.

Depending on what the outgoings on the property are and how they are structured, these can be real costs that are taken on by the occupier that the owner would otherwise have to pay.

More importantly for many property owners, the presence of activity in an area grows the medium to long-term value of their property. Active shopfronts lead to increased traffic in area, attract new interest and, as the example in Newcastle has shown, can lead to renewed interest from commercial tenants.

Several of Renew Newcastle's shops and many others around them found paying tenants in the last 12 months.

Benefits to the wider community

The greatest benefits of an approach like this are not for any one group but for the community as a whole.

Many of the creative projects that Renew Newcastle stimulates are small businesses - they create jobs, spend money in the city, generate economic activity, and make a city a more desirable place to live in, move to or do business.

For the city, Renew Newcastle projects have generated a new story and rebranded the city, both to the local community and further afield. Stories about Renew Newcastle and the promotion of the Newcastle CBD as a distinctive and interesting place have appeared in international magazines, web sites, newspapers and travel publications.

On a more immediate level, the presence of more people on previously empty streets contributes to passive surveillance, improves safety and grows the long-term value of the area.

How Renew Newcastle projects have evolved

Renew Newcastle is limited in what it can do and all projects are effectively temporary. As Renew Newcastle does not promise access to a permanent subsidised space, the main thing it offers is a chance to test out a new idea or to try something without a lot of risk attached. Many projects - such as short-term exhibitions and events - are only intended to be short term in any case.

And not all projects will succeed. There is an element of chance about which ones are there for the long term or not, as it depends in most cases on the vagaries of the commercial property markets.

By the the first year, some Renew Newcastle projects had been there for nearly a year and look like continuing indefinitely; some had closed; others have lost access to subsidised spaces after a period of months as new tenants have moved in; and one had moved on to paying commercial rent.

Other projects had evolved: one shop owner had long enough to realise that the shop they had opened was not successful but the classes that they were running from there were. After several months they decided to close the shop and continue with the classes from another Renew Newcastle venue.

Renew Newcastle's aim is to give projects long enough to determine if what they are doing is viable. Experience shows that realising that something isn't viable in a way that doesn't cost a lot can be highly valuable to fledging creative initiatives.