News / Community
From strangers to neighbours to business partners
Not-for-profit model could be replicated in other apartment projects
Mark Phillips
WHEN a group of strangers began preparing to move into their new apartments in Brunswick they had no idea they would also end up as partners in the ownership of a shop.
But a couple of years later, they are not only neighbours but also joint landlords of a large retail space at the bottom of one of the residential buildings in Nightingale Village.
Their tenant at the Nightingale Evergreen building is Good Cycles, a bike store and workshop that is operated as a social enterprise.
The property is owned by a trust in which more than a dozen Nightingale Village residents have bought units.
It is a model that they are now keen to see replicated in other apartment projects.
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Katherine Sundermann, who lives with her partner in the Evergreen building on the northern side of Duckett Street, said the idea to become commercial property landlords grew out of concerns during construction in 2020 that the street-facing retail spaces could end up being empty or occupied by inappropriate businesses.
After a series of online meetings, an initial group of about 80 apartment buyers was whittled down to about 20 who worked with a financial planner to purchase the commercial space. By combining their finances, they were able to raise the $640,000 required to buy the property outright.
When it came to identifying a tenant, all of the investors agreed it had to be one that aligned with their own values. This was more important than generating a massive financial return.
“We had a vision that it had to be a business that provided a service for all of Brunswick and not just our enclave,” Sundermann said.
Another partner in the unit trust, Kai Brach, who lives in the Nightingale CRT+YRD building across the road on the southern side of Duckett Street, said Good Cycles had ticked all the right boxes because it was a not-for-profit enterprise geared around sustainable transport.
Good Cycles had already been on the radar of developer Nightingale Housing when Brach made inquiries.
“This is a precinct where cars are discouraged so it’s been a good fit with our goals of sustainable transport,” he said.
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Good Cycles Brunswick, which is the fourth of a growing chain of shops in Melbourne and Geelong that sell bike accessories and offer servicing and repairs, moved into the space in the spring of 2022, a few months after the residents had settled into their apartments.
The co-owners have set an initial modest return of 2.5% per annum from their investment and have rented the space out to Good Cycles for below market rates.
“I think a lot of people would have been comfortable with not earning any return at all,” Sundermann said. “It definitely confused a lot of accountants and financial planners when we were setting up.”
They have also foregone paying out any initial dividends so earnings can instead be used to build a “war chest” for when the level crossing removal project begins and the Upfield share path closes as this will probably force their tenant to also close for a period.
Sundermann and Brach said the group of Nightingale Village residents were keen to help others replicate their model. They have documented the process they underwent on the path to becoming commercial landlords, and want to make their learnings available to others.
“It’s been really nice to see people come together and try to create something that isn’t based around making a profit but instead doing something that contributes to our neighbourhood and area,” said Brach.
They have also been in talks with the Lord Mayor’s Charitable Foundation about using the Brunswick Good Cycles tenancy as a case study for what could be a project to find owners for empty tenancies in the CBD and inner city that could be leased as creative spaces and to independent retailers.
