Retrofitting efforts and recent residential conversions are giving older office and apartment buildings a second chance at life at a time when the dated structures are rapidly falling out of favour with tenants. One of the most significant steps in this direction this year has been the joining of forces by investment manager Investa and construction and development company Built in a bid to transform aging office buildings in the Sydney and Melbourne CBDs into environmentally sustainable office spaces. Another was the $125-million renovation of Melbourne’s former Australian Unity Insurance headquarters that saw the dated building recast as a 15-storey retirement village.
Industry bodies are hopeful the conversion of the Australian Unity office block will inspire other builders to do similar. Victorian Executive Director of the Property Council Australia Cath Evans said the project should spark interest from owners of similar older-style buildings, especially those who were more than willing to think outside the box – especially when the two-bedroom assisted living apartments in the former headquarters were set to achieve sale prices between $615,000 to $2 million. "There's going to be interest from current owners of those properties to think about how they can be used for other purposes," Ms Evans said. "This presents a real opportunity and will enable us to solve a whole lot of problems."
In the Sydney CBD, one of the biggest urban renewal projects is 338 Pitt St, a mid-city block that received approval two years ago for redevelopment into two interconnected 80-storey towers surrounded by six podium buildings filled by retail outlets and a hotel. The redevelopment – instead of demolition and full rebuild – has been calculated as saving hundreds of dollars per square metre while significantly reducing the environmental impact of a rebuild.
Analysis by the likes of JLL forecasts that more than three quarters of Australia’s older office buildings will still be in use by 2050. But to meet the country’s net-zero goals, these commercial buildings will require retrofitting at a rate of 3 per cent to 3.5 per cent a year. This is one of the reasons Built and Investa have been so inspired to find aging properties priced up to $90 million in the Sydney and Melbourne CBDs that possess the potential for repurposing into sustainable A-grade commercial office buildings.
“Owners who have not invested in their assets, or who have held onto low-grade stock, face both asset devaluation as well as asset obsolescence. It is here where the venture will focus,” Investa chief executive officer Peter Menegazzo said. “Repurposing ESG-obsolete assets to create bespoke, high-quality and amenity-rich workplaces with leading ESG credentials for forward-thinking employers to occupy is a theme we strongly believe in both from an occupier and investor perspective.”
Once established in Sydney and Melbourne, Investa and Built intend expanding the “brown-to-green” project to other major city CBDs. The project will reduce carbon emissions to 40 per cent and all redevelopments will carry a minimum 5-Star NABERS weighted average rating.
Environmentally friendly solutions that avoid demolition of older apartment blocks to make way for modern versions are also giving dated residential buildings another chance. Academic fellow in Architectural Practice at Sydney University, Guillermo Fernandez-Abascal, and Urtzi Grau, Senior Lecturer and director of The Master of Architecture at Sydney’s University of Technology have proposed that instead of demolishing the 960s and 70s brick apartment blocks that exist in dozens of inner city suburbs across Sydney and Melbourne, they be remade via a series of unique concepts that not only utilise existing structures but foster greater connection between neighbouring residents.
An ideal example would be to take four similar adjoining blocks still in an “adequate sate” and then remove the fences between them to create “a shared collective space to join them”. While creating more common areas to be used for anything from gardening to reading and socialising, the architectural strategy would involve creating a new steel core with stairs and lifts shared between the two blocks, plus “semi-interior spaces carved out of the building’s façade as well as balconies, winter gardens and more units atop the existing buildings. Such an overhaul would remake “this awkward yet quintessential housing type offers an alternative path to medium density living” the pair proposed. “Adaptive reuse reduces the damaging impacts of an all-new development. These impacts include emissions from demolition, construction and the energy used for making and transporting both the discarded and new buildings materials.”