Startups hostage to rent seekers

James Riley
Editorial Director

Innovation Nation is a great slogan – but it rings hollow if startups and entrepreneurs don’t have anywhere to camp, which is increasingly the case in Sydney.

It’s a simple numbers game.

Atlassian has 860 people working out of nine floors across two buildings in Sydney’s CBD but after four years in the premises is fast running out of room to move and has a team of people working full time to find it new digs. Fishburners has 170 start ups working out of its co-working premises, but has run out of room and been looking for a new space for two years.

Cannon-Brookes: “We lost ATP to big business and all that bullshit”

Meanwhile the Australian Technology Park (ATP) race has been won by the big end of town with just 4.6 per cent of the 15 hectare site earmarked for tech companies, and that won’t be ready before 2020; there are 13 proposals being considered for the White Bay redevelopment, but that could take 20 years to complete; and there’s still real concern that the State Government might yet flog off the Powerhouse site to unit developers.

As Professor Roy Green, dean of the UTS Business School, noted; “Had Silicon Valley been sold off for condos, California might not have had the enormous wealth producing industries that it has.”

And Australia needs new era wealth-producing industries. Mike Cannon-Brookes, co-founder and co-CEO of Atlassian reinforced how high the stakes are.

“Australia has a big place in the tech industry going forward, if we are not investing in technology we are completely stuffed as a nation.

“We are 1 per cent of the world’s GDP – if we are not producing 1 per cent of world’s technology in 20 to 30 years’ time there is no way we can maintain that position.”

When Mirvac and CBA won the rights to develop the ATP, signing a $263 million deal with the State Government last November, they squashed Atlassian’s (admittedly very late) plans to turn the site into a tech hub. While 75,000 square metres of the ATP development will be devoted to technology businesses – that’s just 4.6 per cent of the 15 hectare site, which won’t in any case be complete before 2020.

The White Bay redevelopment scheme has attracted 13 proposals with a decision expected in June. The precinct however is expected to take 20 years to complete.

Meanwhile the NSW Government plans to sell off the Powerhouse Museum site to developers – though it is facing mounting pressure to reconsider its plans. Professor Green still holds out hope that the Government might be persuaded to change its mind.

Noting that the ATP issue is over, Professor Green said; “There’s no point in following that rabbit down the hole. Atlassian came in fairly late. White Bay is a long way hence.” Which leaves the Powerhouse site as the last site standing.

“It would be short sighted to abandon it to property developers,” said Professor Green, who believes there would be a long term stream of value available to the State Government if it maintained some aspects of the Powerhouse Museum in Sydney (rather than moving the entire collection to Parramatta) and also opened up the site for tech companies to use.

“We would very much hope there is room to manoeuvre,” he said.

Atlassian’s founders are still smarting about the ATP loss, but Mr Cannon-Brookes said that despite the “horrible horrible decision”, it had served to galvanise the tech sector and act as a rallying call.

“A lot of us got together to defend something we hadn’t really thought we were losing. We lost it to big business and property and all that bullshit.”

However he said it had; “Started a good conversation.”

Murray Hurps, general manager of Fishburners is part of that conversation. Home to 170 start ups and entrepreneurs Fishburners has made the Ultimo/Pyrmont precinct the nation’s densest concentration of tech companies with around 40 per cent of the nation’s tech creatives according to Professor Green.

Mr Hurps said that real estate remained a major limitation for Australia’s startup scene, and that Fishburners had been looking for new premises for two years.

“We can afford the space – it’s not the price, it’s the availability. We need something with easy accessibility and visibility that isn’t insanely expensive.”

The City of Sydney’s draft Tech StartUps Action Plan, released last year, acknowledged the property challenges fast growing businesses face in Sydney, but offered few concrete solutions.

It has said it might consider using voluntary planning agreements and planning zoning to encourage more innovation spaces where tech start ups are currently clustered, and also could review of its own property portfolio to see whether there are spaces that could be used by startups.

It’s a more piecemeal approach aimed at finding startups somewhere to camp, rather than a grand vision for a dedicated tech zone.

Mr Hurps however isn’t convinced that there is the need for a dedicated innovation precinct in any case, saying that it is possible Sydney itself – at least the CBD and inner suburbs – could become an innovation city in its entirety, given that the CBD is already home to organisations such as Atlassian, Stone & Chalk and Tyro FinTechHub.

“The future innovation area for Sydney will be the CBD – there’s enough happening,” he said.

Do you know more? Contact James Riley via Email.

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