Lease default kicks Gold Coast Innovation Hub out of the nest
Written on the 15 January 2020 by Matt Ogg & David Simmons
Businesses involved with Gold Coast Innovation Hub have found themselves scrambling for space after one member defaulted on the lease at Robina Group's commercial centre The PC in CBDRobina.
The incubator's CEO Sharon Hunneybell claims 42 Innovations, which was in charge of providing the lease for the workspace, defaulted and failed to inform the occupants.
"So we've found ourselves having to move at a very short notice," Hunneybell tells Business News Australia.
"It's pretty devastating."
She claims 42 Innovations is in breach of its collaborative agreement and has been removed from operations. Daniel 'Danny' Maher is the sole director of 42 Innovations according to ASIC records, and he is also one of three directors at the hub and the founder of Opmantek.
It is understood commercial property expert Rob Cooke was brought in as the hub's workspace manager in October last year, but directors have been vague as to the full nature of his responsibilities and have been unwilling to put reporters in contact with him.
"At the moment we're working with government to consolidate with the Health & Knowledge Precinct," adds Hunneybell.
"As a hub we've gone out to other co-working spaces and groups that we've been working with to make sure that our members are able to continue working.
"Some of them have moved to a workspace which is down the road, a lot of them will be moving to the Health & Knowledge Precinct, and Bond University have made a building available on Varsity Parade so we'll have some members in there temporarily while we sort it out."
The executive emphasises that despite this hiccup the hub as a not-for-profit is "fine".
"It has been operating as it should be. Unfortunately we've been relying on partners for key items that's unfortunately affected us in this way, but as a community we're all committed to supporting each other and I believe we'll be able to move through this."
Robina Group has confirmed its tenant 42 Innovations had its lease terminated for non-payment of rent.
"The company is in breach of its lease obligations, is in substantial unremedied rental arrears and we are left with no choice but to terminate the lease," a Robina Group spokesman said.
"Regardless of the non-performance of 42 Innovations, Robina Group remains very supportive of the Gold Coast Innovation Hub."
A Robina Group spokesman also provided a response to a question about the ownership of 42 Innovations.
"We have not been formally notified of a change in shareholding or directorship of the lessee," the group said.
The PC building itself is currently listed for sale by Knight Frank Gold Coast with an asking price of $10.995 million.
When the 1,822sqm three-level lease for the newly Hub was secured in mid-2018 it was the largest of its kind in the city in 12 months.
"Lease deals over 1000sqm on the Gold Coast are relatively rare, so this is a significant deal for the city," Knight Frank office leasing specialist Tania Moore, who negotiated the deal, said at the time.
"The Gold Coast has the highest number of small and medium-sized enterprises (SMEs) per head of capita Australia-wide and, as an incubator, Gold Coast Innovation Hub will allow these start-ups to base themselves in the sought-after precinct while they work to expand into their own premises over time and promote a culture of entrepreneurship.
"It will create a catalyst for tech companies to establish a footprint on the Gold Coast, which is extremely positive for the city as a whole."
The Queensland State Government slated $500,000 in funding for the Gold Coast Hub over a three-year period in mid-2017, although it has clarified the funding is not used for lease payments.
The state government's pledges were followed by the City of Gold Coast committing $125,000 per year for a three-year period from 2018-19.
Year two of the council's funding are subject to the satisfaction of certain key performance indicators (KPIs).
Déjà vu for Gold Coast developer
This is not the first time Danny Maher has fallen short of lease agreement obligations, according to allegations from one Gold Coast business insider.
Matt O'Brien, managing director of Gold Coast investment and development group Hutchings O'Brien, says he has been burnt by those involved with a previous iteration of the hub.
Named 'Gold Coast Hub' at the time, O'Brien was approached by the group to enter into a lease agreement for the iconic former Billabong 'Wave' building at 20 Kortum Drive.
He says the company was approached with a deal whereby the hub assured the developer the lease would be guaranteed by the Queensland State Government.
Hutchings O'Brien spent serious capital on the building to suit the trendy startup, including new glazing and a repaint to match the hub's colour scheme.
The plan was for the Gold Coast Hub to moved into the building rent-free for three months, after which lease payments would be expected to commence.
But the incubator allegedly didn't cough up when it came time to pay, according to O'Brien. Another month passed and he had no choice but to evict the hub from the premises.
"This was for a premises where essentially we had foregone about $300,000 in rent," says Tom O'Brien, CFO of Hutchings O'Brien.
"And then we lost so much rent after having to take the property back to market. We lost more than half a million," says MD Matt O'Brien.
"They ended up surfacing again in the Gold Coast Innovation Hub capacity just two suburbs over with the same logo and colour scheme," says Matt.
"We just feel for the landlord. We just hope he was not as exposed as we were."
Business News Australia
Author: Matt Ogg & David Simmons