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Tuesday, November 30, 2021

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Refurbish and refresh

Words // Knight Frank Cairns

The appetite for properties has remained strong throughout the calendar year, with a number of high-profile sales supporting continued interest in the region.

These high-profile sales range from traditional yielding properties, which are considered better returns than those in major metropolitan areas, with compression of yields creating disparity in those markets and seemingly better opportunities in regional areas generally. As a result, Cairns has naturally had the benefit of activity, including sales of larger englobo sites for ongoing residential development, with demand still exceeding supply at the present time.

Development costs are still proving to be a barrier to start-up developments, with financing and pre-commitment criteria the biggest deterrents. As a direct result, building owners have turned towards refurbishing and refitting buildings to realign properties to market needs. A good example is the refurbishment of a property located at 13-15 Mt Milman Drive in Smithfield, which was originally a single tenant to a large hardware operator. The property is now being refurbished into two box retail opportunities, with half the building leased to Anaconda and the other half available to a box retailer on completion of works in September 2021.

Industrial properties and box retail opportunities in the Smithfield corridor are very limited given the nature of the overall planning area and the areas available for commercial and industrial development.

As is usually the case with buildings, modern standards and up-to-date specifications and sustainability criteria are always paramount to keeping buildings market ready. At the present time, it appears that refitting buildings is a much more economic opportunity than new builds. In the CBD, the building on the corner of Shields and Grafton Streets is scheduled for a major refurbishment. The refurbishment will not just update the building and its facilities to provide what the market is currently requiring (such as modern fixtures and fittings including ambulant facilities etc), but it will also provide end of trip facilities and complete flexibility on commercial office space design. In addition, refurbished areas create more efficient buildings with lower direct occupancy costs and up-to-date sustainability criteria to assist tenants and to reduce the costs of their occupancy footprint.

The trend to refurbish buildings is becoming more apparent, with many CBD properties also undergoing refurbishment. One of the more notable examples is the refurbishment of The Benson Hotel and ground floor retail area on the corner of Spence and Grafton Streets.

Connect // knightfrank.com.au/contact/cairns

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