Revamps are bring back the ‘wow’ to older, dated office buildings

“It’s so rare you have a chance to completely reposition an entire building from top to bottom and refurbish it to A-grade standards in line with current tenant demands,” says Resonate Partners co-founder and director Aaron Weir of the newly named Valentine Place.

“So, AOF agreed to reposition the building to undisputedly A-grade to make it one of the better buildings in Parramatta.

“It will be finished by mid-year and will have a new lobby, new end-of-trip facilities, lots of ‘third spaces’, a new ground-floor cafe and external areas around the forecourt and stairs leading down to Valentine Avenue, which had previously been pretty drab. And the market now is responding pretty well.”

Valentine Place is just one of a vast range of older, dated office buildings being upgraded to A-grade and premium class, largely because of the flight to quality by prospective tenants.

Today, they’re increasingly looking for buildings with better sustainability features, more amenities, flexible design and good views – and some existing stock just doesn’t deliver.

“When, post-COVID, you can now get A-grade commercial property for B-grade prices, and you need less room for employees, it makes sense to go for better-quality space,” says Helen Tarrant, the founder of buyers’ agency Unikorn Commercial Property.

“We’re seeing a lot of the second-tier property now being upgraded or let out to RTOs [registered training organisations] as is.

“But in a market where rents came down 30 to 40 per cent – Sydney will be back to normal in the next 12 months, and Melbourne probably in two years – there’s plenty of leasing demand.”

The upgrades are mostly taking the form of improving the facades, installing floor-to-ceiling glass to maximise views, improving heating and cooling systems, replacing gas with electricity, improving energy efficiency, refurbishing lobbies and stairwells, creating smaller spaces within floors for Zoom meetings and phone calls, and providing facilities like kitchens, change rooms and better technology.

Resonate Partners’ Weir says at a time when there’s a pause in new development because of high interest rates, hefty construction costs and shortages of trades, it makes more sense to upgrade buildings instead.

“Valentine Place will be the only new whole A-grade building delivered to the market in Parramatta this year, so the timing will be good for it. There’s probably no more than two to three properties in Parramatta with more than 2000 or 3000sqm of contiguous space. All investment decisions come with risk, but the repositioning of these buildings works well, and especially with that timing.”

The drive to upgrade has been led, in many ways, by the remaking of the Quay Quarter Tower (QQT) by Sydney’s Circular Quay which had a complete re-adaptive re-use revamp, which retained 65 per cent of the existing structure and 95 per cent of the existing core.

The massive operation resulted in a net saving of 12,000 tonnes of embodied carbon – the equivalent of 100,000 flights between Sydney and Melbourne – and a 13-month reduction in construction time, saving an estimated $140 million in costs. The building ended up winning 66 major awards.

“We are thrilled with how it turned out,” says Liann Lim, senior development manager for office at Dexus. QQT is owned by Mirvac Wholesale Office Fund (MWOF), Dexus Wholesale Property Fund and Rest, and managed by Dexus.

“There’s a growing demand for net-zero carbon buildings, and it was an opportunity to make really good planning moves as well by renovating across two city blocks and opening up connections and creating a real network of laneways around the precinct.”

Dexus and MWOF are now repositioning 33 Alfred Street, Sydney, while Stockland is also considering upcycling the structure of Stockland Piccadilly, 100 metres from Pitt Street Mall.

Similarly in Sydney, the 17-level 309 Kent Street has just received a major upgrade.