For example, flexible leasing terms were attractive to emerging enterprises because they reduced balance sheet liabilities, which is an advantage when growing a business under uncertainty. Those same flexible leases made the project considerably less attractive to banks, as they reduced the long-term contracted income that conventional lending models prefer. Neither perspective was wrong; start-ups and lenders were simply looking at the same project through different lenses.
A PARTNERSHIP BUILT TO ADAPT Merri-bek Economic Development Unit Manager Chris Cheal and Facilitation Officer Alana Smith were recently asked to reflect on what had kept the project moving forward through six years of changing circumstances. Their answer came down to two things: a twenty-year lease between Merri-bek City Council and Impact Neighbourhoods that clearly defined the responsibilities of both parties, and a shared commitment to transforming the site into a business-led hub that would support local enterprise and strengthen the local economy. That common purpose provided a consistent foundation for the partnership, even as circumstances around the project continued to change.
COVID altered the way people worked overnight, construction costs rose far beyond anyone ' s expectations, supply chains faltered, labour resources
Construction of the BRUDI site
evaporated, interest rates moved, market demand continued to evolve and even the organisations’ thinking about what BRUDI could become matured as they learned more about the opportunities emerging from the surrounding community. Through all of those changes, the shared purpose behind the partnership remained constant, and that consistency became one of the project ' s greatest strengths, giving both organisations a North Star to navigate back to whenever circumstances changed.
One of the key themes that repeatedly emerged through BRUDI was that economic development often involves navigating trade-offs rather than simply solving problems. Practitioners understand this instinctively because almost every significant decision involves balancing competing priorities and different definitions of success. BRUDI simply made those trade-offs more visible.
The 20-year head lease itself gradually became much more than a legal agreement; it created a different economic relationship between Council and Impact Neighbourhoods. Rather than treating rent and investment as separate conversations, Merri-bek Council was prepared to exchange future rental income for immediate private capital investment in the asset. That single decision reduced the cost of improving the building, aligned the interests of both parties and created a commercial pathway that allowed the project to keep moving despite considerable uncertainty about what the site might become. The steady flow of investment into improvements gradually increased the value of the asset for everyone.
LEARNING HAS A COST The story did not unfold exactly as expected. Construction costs accelerated rapidly after the lease was signed, meaning the cash investment target was reached before every planned improvement had been completed. It was a practical reminder that long-term partnerships need enough adaptability to absorb changing circumstances rather than assuming today ' s assumptions will still be valid tomorrow.
COVID made that adaptability more than theoretical. Site access restrictions meant Impact Neighbourhoods was unable to complete the level of technical due diligence it would ordinarily have insisted on before signing a twenty-year commitment. It was only once techbased tenants like Nutromics began specifying their power requirements that the inadequacy of the building ' s electrical infrastructure became apparent. In hindsight, that gap should have been closed before commitment, not after. Instead, new power infrastructure had to be retrofitted into an occupied, ageing
VOL 19 NO 2 2026 12 www. edaustralia. com. au