Office landlords in Melbourne’s central business district are shifting away from expensive rebuilds toward targeted upgrades and asset activation. This strategy focuses on improving leasing performance without the cost and disruption of full-scale renovations. James McMahon, an Associate Director at Colliers, said the approach is becoming a standard part of leasing campaigns across the city.
Understanding the asset
McMahon explained that successful strategies often start by analyzing what a building already offers. Rather than treating an asset as needing a total overhaul, landlords identify where it can be strengthened. This method lets them build a leasing strategy around existing attributes instead of starting from scratch.
“Landlords are increasingly recognising the opportunity to breathe new life into existing fit-outs, refurbishing quality spaces to present as fresh, modern offerings while avoiding the cost of a full rebuild,” McMahon said. This approach creates a win-win, allowing landlords to deliver greater value to tenants through attractive rental incentives and abatements while providing occupiers with a high-quality workplace solution at a more competitive overall cost.
The 525 Flinders Street building serves as a case study for this method. The asset had experienced a long period of vacancy before reaching full occupancy under new ownership. The landlord took a proactive approach to repositioning the site, introducing an on-site gym, activating the café offering and directly addressing previous security concerns. These targeted improvements helped transform the tenant experience and create positive leasing momentum.
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Existing strengths
McMahon noted that the strategy worked because the building fundamentals were already strong. The location offers excellent public transport connectivity, abundant natural light and access to green space. Through hands-on building management and the ability to make quick decisions, the landlord was able to capitalise on these inherent strengths.
Another example is 360 Collins Street, where McMahon secured a seven-year lease with engineering consultancy ACOR. This transaction attracted an occupier from Melbourne’s fringe to the CBD. The lease incorporated a tenant-led refurbishment of the existing fit-out, providing a more cost-efficient approach while allowing the occupier to align the workplace with its sustainability objectives.
Leasing activity at 501 Swanston Street further highlights the success of targeted retrofit strategies. After upgrading and modernising existing fit-outs across approximately 2339 square metres, the landlord achieved 100 per cent occupancy. Peter MacCallum Cancer Centre and Peter MacCallum Foundation secured 942 sqm and 455 sqm respectively on five-year terms, while New Era Caps leased 898 sqm at 525 Flinders Street for three years.
Cost-efficient upgrades
The most effective upgrades are not necessarily the most expensive, according to McMahon. Occupiers are increasingly prioritising value and efficiency when making real estate decisions. Businesses look for workplaces that strike a balance between quality, amenity and functionality while ensuring their occupancy costs represent genuine value.
