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Flight to Quality: Why Now is the Ideal Time to Modernise Your Commercial Property

By Michele Dale

Amidst the surge in demand for commercial property on the Sunshine Coast, the pursuit of quality has taken centre stage.

In an era where the workspace is not merely a physical location but a strategic asset influencing productivity, brand image and employee well-being, a flight to quality commercial assets is evident.

Traditionally, businesses may have been content with functional spaces that met basic operational needs. However, the contemporary commercial landscape has evolved, demanding a higher standard. The flight to quality is characterised by a growing preference for spaces that extend beyond functionality, offering value-add fitouts and aesthetics.

This transition has implications for property owners aiming to attract premium tenants, secure long-term lessees, or position properties for profitable future sales.

MODERNISING FOR COMPETITIVE ADVANTAGE

RWC Noosa & Sunshine Coast property consultant Josh Harris says modernisation is one of the simplest ways commercial owners can increase demand and value in the current market.

“Banks are requiring higher contingency levels due to the increasing construction costs seen over the last 2-3 years. This reduces the available funding for buyers to purchase a property and invest in a fitout at the same time.”

“With some banks now supporting up to 85% LVR (loan to value ratio) on owner-occupied commercial premises, buyers are focusing on properties where the fitout already meets modern standards and allows them to borrow against that already realised value.”

The result is strong demand and higher than expected sale prices for properties where owners have completed modern fitouts and allowed the incoming buyer to make minor changes without substantial costs.

David Brinkley, RWC commercial property consultant, says renovated commercial properties are renting twice as fast as those without upgrades.

“Whether it’s a basic coat of paint and fixing the walls through to a comprehensive refurbishment, many upgraded properties in key locations like Noosa, Noosa Junction, Maroochydore and Caloundra are being snapped up as soon as they hit the market. A refurbished property makes it easier for a higher quality tenant to decide quickly, commit to a longer lease and pay a premium price,” David said.

INCREASED INCOME AND RETURNS

Better-quality and more modern facilities are likely to command premium rental rates. With current construction delays and costs, buyers and lessees are willing to pay a higher price to know they can move in and start trading immediately.

RWC Sunshine Coast & Noosa Principal Paul Butler says that upgrading is a worthwhile exercise for properties in a good location with an outdated or B-grade structure or fitout.

“If I were to buy a freestanding property in Hastings Street Noosa today, it would be circa $10 million. Improvements could cost anywhere from $500,000 to $1 million. The subsequent rental rate could increase from around $2,000 to $3,000 a metre, offering a significant return. It pays itself back in a very short timeframe,” Paul explained.

By offering improved amenities and modern features, tenants are more likely to be satisfied and sign longer leases. Reduced tenant turnover can save on vacancy and leasing costs. And if you decide to sell in the future, improvements can contribute to a higher selling price and more competitive market position.

GETTING THE ESSENTIALS RIGHT

In many cases, basic modernisation or upgrades can make a big difference. Key elements include being well presented, with a tidy entry area, safe and modern flooring, good lighting, functional air-conditioning and a fresh coat of paint.

View the property through the eyes of a prospective tenant or employee. What can you do to improve the experience of people who will work in or visit the premises? Pay attention to entry and reception areas, bathrooms, toilets and kitchens.

The Essentials Checklist

  • Clean and tidy overall
  • Remove evidence of previous tenants
  • Remove asbestos
  • Replace old or cracked tiles and fix holes in walls
  • Ensure the building is water tight and the roof is intact with no leaks
  • Refresh the entry and ensure it’s free of clutter
  • Upgrade facilities such as bathrooms, toilets and kitchen
  • Install good, functional lighting
  • Ensure air-conditioning is in top condition and fully operational
  • Recoat or reseal flooring
  • Install working doors and windows
  • Slap on a fresh coat of paint
  • Basic landscaping.

Paul Butler recommends paying particular attention to add-ons from previous tenants. “Tenants come and go, leaving fittings behind or adding infrastructure that may not suit the next tenant or the space overall. Peel back the layers and clean out the superfluous to get the space back to a functional, usable shell,” he said.

For industrial property, features such as sealed floors and painted walls add value and are attractive to online business owners who are warehousing goods such as clothing, according to RWC commercial property consultant Tracey Ryan.

“A good example is 10 Rene Street, Noosaville which was an absolute eyesore. Since its refurbishment, it’s only had one vacancy and the rentals were above market at the time of completion.”

“Anything that helps your property to stand out and rent more quickly is worthwhile. An empty commercial property costs money every week it is empty. A coat of paint, remote control for the roller door, sealing the floor – small things do make a difference.”

FROM LOCAL NEWSAGENT TO NATIONAL TENANT

A heritage-listed former newsagency in Yandina attracted a national tenant on a long-term lease following an extensive refurbishment.

RWC commercial property consultant Chantel Dielwart says the early 1900s building was sold by RWC Noosa & Sunshine Coast 18 months ago for $485,000 and has since been transformed while maintaining the heritage aspects of the property.

Stevens Street – Before

The renovation included stripping back the inside, installing new wiring, plasterboard, trusses and ceiling, along with solar panels, new lighting and air-conditioning. The original flooring has been polished, veejay panels installed on the walls and a fresh coat of paint applied throughout.

Stevens Street – Renovated

“We estimate a few hundred thousand dollars were spent on renovations. The property has a quality tenant in Ringers Western on a strong long-term lease which adds value. It’s now back on the market expecting to sell for close to double the original purchase price,” said Chantel.

LONG TERM VIABILITY

The flight to quality is not solely about aesthetics—it’s an investment in long-term viability. While these premium spaces may entail higher initial costs, businesses perceive them as assets that yield dividends regarding employee satisfaction, client engagement and operational efficiency. Such spaces are more resilient to market changes, acting as a buffer against economic fluctuations.

Sunshine Coast businessman/developer and entrepreneur Ralph Rogers knows this well. Ralph has an extensive history of impressive commercial property makeovers, including Acres Noosa and the old ANZ bank in Coolum Beach which was completely redesigned and rebuilt after being sold to Ralph by RWC Noosa & Sunshine Coast. Ralph sees reinvestment as fundamental to property ownership.

“We see commercial property as a business rather than a passive investment, and actively manage our properties and our portfolio. We believe we have an obligation to make sure a building is relevant for today and tomorrow. Things like hydraulics upgrades, electrical upgrades, appropriate NBN connections, insulation and roofing are fundamental to ensuring a building is set up for now and in the future.”

“What I do is not for the fainthearted. The combination of the cash it takes, obtaining relevant approvals and the lead time for the property to be profitable means you have to be committed to creating a unique property, rather than trying to find an existing one. On the other side of the ledger, if you wish to optimise returns, and if you want to build a portfolio of property that’s relevant into the future, then it’s a pretty exciting activity.”

The before and after photos of 1820 David Low Way Coolum tell a compelling story. The rundown 1960s building was looking derelict after sitting vacant for two years. Ralph envisioned what it could be and set about to create a destination location that tenants could proudly show off.

1820 David Low Way – Before

1820 David Low Way – After

“The property has been rebuilt to today’s building code with the latest in grease traps, hydraulics, three-phase, insulation, acoustic glass and so it goes on. So I guess the question is why would you do that?” Ralph said.

“If you’re in commercial property as a business, you want to make sure every property is a standout, particularly in a competitive tenancy market. You do that by future-proofing the building, making sure you build into the refurbishment everything that could possibly be required. That building now has another forty years of life.”

The original vision Ralph had for the building was a large single food and beverage operator. However, as explained by RWC commercial property consultant David Brinkley, once the build commenced and RWC began marketing the property, current market feedback indicated it would need to be split into separate tenancies. 

“The Suncoast Skin tenants were the first to fall in love with the building and we separated a large ground floor tenancy off for them to occupy. Next we secured One Agency real estate who leased the balance of the ground floor. The first floor tenancy was the last piece of the puzzle, with an artist securing it as a studio/gallery space,” David said.

“While on this occasion a hospitality operator did not secure a space within the building, there is inbuilt flexibility should the next round of tenants share Ralph’s vision of cocktails on the balcony overlooking Coolum Beach.”

NEXT LEVEL UPGRADES

Investing a more substantial amount in commercial upgrades can be prudent for investors seeking higher returns or long-term cost savings for tenants, to attract tech-savvy businesses or to address industry-specific needs.

Next Level Checklist

  • Energy efficient features including lighting, heating, ventilation and installing solar panels
  • Lift the ceiling height
  • Exterior upgrades including the roof, façade and external finishes
  • Rewiring, especially for older premises
  • Smart technology integration
  • Accessibility compliance (required under regulations for major building works)
  • High-speed internet and connectivity
  • Multiple water meters for strata properties
  • Flexible and collaborative spaces such as modular designs that can be easily reconfigured
  • Safety and security such as advanced access control systems, surveillance cameras, and fire protection measures
  • Flooring upgrades such as epoxy finished floors
  • For industrial properties: installation of showers for staff convenience, enclosed and finished mezzanine offices, and three-phase power installation.

In a competitive landscape, maintaining a well-kept commercial property is essential. Taking the next step and modernising the property will set it further apart and potentially yield higher short and long-term returns.

From basic improvements like clean and tidy presentation to more complex renovations, modernisation is about future-proofing, ensuring relevance and functionality for decades to come.

As the market continues to evolve, upgrading represents a strategic imperative for property owners looking to thrive in an ever-changing commercial landscape.

For chat about your commercial property or the market in general, get in touch with our team on +617 5474 7600.

Offices in NOOSA | CALOUNDRA | MAROOCHYDORE

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