Perhaps you are looking for something like this instead?

use strict;
use warnings;

my $data = do {local $/; <DATA>};

$data =~ y/ \n/ /s;

# add the following if you want to strip space after >
# and before < characters.
# $data =~ s/(?<=>)\s|\s(?=<)//gm;

print "$data\n";

__DATA__
<thing>
 condition
   condition
    randomness
      other junk
        more junk

</thing>
[download]

and the output -

<thing> condition condition randomness other junk more junk </thing>
[download]