Office owners reap rewards for Gold Coast facelifts

The Gold Coast’s office market is continuing to improve, with signs that the refurbishment of existing buildings is providing lucrative opportunities for investors and developers.

A report from Herron Todd White highlights that there have been numerous refurbishments of existing office buildings in the region that have generated positive returns.

The report notes the refurbishment of the building at 16 Queensland Ave, Broadbeach, which was purchased for $6 million in 2012, with a “reasonably significant” upgrade subsequently undertaken at a cost of $800,000 to modernise the lift and internal floor space.

“This property was sold in May 2015 for $11.86 million, reflecting circa $5500 per square metre on lettable floor area and an analysed market yield in the order of 6.8%.

The offices at 16 Queensland Ave were fully leased after receiving an internal makeover

“This transaction represents one of the higher value rate levels achieved in recent times and also indicated a firm yield in arguably a Gold Coast market that is in its best state for a long time period,” Herron Todd White’s report states.

That assertion is backed up by the Property Council of Australia’s Office Market Report, which reveals the Gold Coast is in its best shape in six years, after a drop in vacancy rates from 15.2% to 14.8% in the six months to July 2015.

Although Herron Todd White’s reports adds that it considers that “marketplace conditions within the Gold Coast office sector are probably now only starting to see the pendulum swing away from tenants and buyers to be more in favour of landlords and sellers”.

Offices at 140 Bundall Rd have undergone refurbishments to match their views

Owners of another prominent Gold Coast commercial property, located at 130 Bundall Road, Bundall, are hoping to benefit from the refurbishment trend following an extensive internal upgrade of the six-level office building.

The five-storey building currently has up to 1850sqm vacant over three full floors, including split tenancies from 130sqm to 308sqm on the ground floor and the full floors of levels two and five, which can be split to a tenant’s size requirements.

CBRE’s Cody Buck and Nick Selbie are negotiating the lease agreements, with rental rates ranging from $265 to $285 per square metre and the opportunity for naming rights.

Selbie says a similar approach was recently taken at 140 Bundall Rd, with the refurbishment generating positive results.

“In the space of 12 months we were able to lease 1031sqm and now have an office building which is 84% occupied,” he says.

“In the current market, prospective tenants look favorably on buildings where the landlord is prepared to invest resources into the property to provide a high quality offering.”