Commercial building owners seek clarity on combustible cladding

Commercial building owners seek clarity on combustible cladding

15 February 2019

Commercial building owners are frustrated that their needs are not being accounted for in the debate over resolving the combustible cladding crisis, says the AFR.

Controversy over the issue has flared again after a residential tower in Melbourne’s CBD caught fire this month after a discarded cigarette butt ignited debris on a balcony.

The fire then spread up five floors of the building’s combustible aluminium polyethylene cladding—the same type of cladding used on London’s ill-fated Grenfell Tower where 72 people died—before being extinguished by firefighters.

Firefighters across Australia’s eastern states have a hit list of up to 10,000 buildings with suspected highly flammable cladding that would be flooded with as many as 50 responders in an emergency, says The Australian.

Many of these structures are commercial office buildings.

State planning ministers are reluctant to identify the buildings at risk due to the potential threat of arson attack.

Owners of commercial buildings with potentially dangerous cladding are required to rectify them, but are hampered in doing so by the lack of a national approach, which many owners with national property portfolios want.

“It’s one of the issues we have all the time—the lack of uniformity in rules and regulations across the country,” said Dexus chief executive Darren Steinberg on Wednesday.

“Whether that’s retail leasing legislation or whether it’s issues such as cladding. It would be far simpler for there to be one set of unified rules in a variety of matters when it comes to real estate across the country.”

Certain types of cladding are now prohibited in various states, and their use carries fines of up to $220,000 for individuals and $1.1 million for corporations.

Commercial property owners have generally been quick to assess the extent of their own cladding liability and work out rectification strategies, but they are hindered by uncertainty about what level of rectification will be deemed acceptable.

They also run the risk that a fix they make now may be deemed insufficient at some future point.

“The onus of responsibility is on the owner to determine what they think is acceptable and lodge [planning] applications,” a person at another large REIT said. “But there’s no firm guidance as to what building owner should do.”

At a meeting in Hobart last week, Australia’s building ministers agreed to a national ban on the “unsafe use of combustible aluminium composite panel cladding” in new constructions, says The Age.

The proposal, however, will be subject a cost-benefit analysis to ensure it does not present any unintended consequences.

The analysis will assess the proposed ban’s impact on the supply chain and building industry as well as a timeline to implement it.

The Victorian Building Authority (VBA) has said it could take two years to remove and replace combustible aluminium polyethylene composite panels from high rise apartments and hotels around the city of Melbourne.

In a positive twist, authorities admit that offices with combustible cladding are less of a risk to life than residential buildings.

“Commercial building stock is a different category, less vulnerable,” Victorian Cladding Taskforce co-chairman and former premier Ted Baillieu said this week. “They tend to be single owners. And single owners are moving quickly on their own account to deal with commercial buildings.”

Dexus is currently engaged in rectification works on at least some of its assets, but Mr Steinberg declined to be specific.

“I think you’ll find from an industry perspective there is a lot of this cladding in the office and industrial and possibly the retail sector across the country,” he Mr Steinberg said.