Queensland’s Coronation Drive hub tipped for residential conversion

BRISBANE, 29 August 2023 – High-profile Brisbane commercial hub Coronation Drive has been tipped for widespread conversion to residential as demand for housing in the city continues to sharpen.

JLL Head of Tenant Representation – Australia, Michael Greene, said the riverside precinct and its surrounds were an ideal candidate for widespread adoption of build to rent and build to sell.

It’s a trend he has already seen taking shape, noting the recent announcement of plans to pivot a high-profile holding at 19 Eagle Terrace, Brisbane City, from a planned commercial tower to residential development amid the ongoing evolution of the city’s needs and usage.

“With the transformation of working practices that emerged out of Covid, we have office space being underutilised while demand for housing in Brisbane is nearing breaking point,” Mr Greene said.

It’s a situation expected to tighten as the city counts down to the 2032 Olympics in Brisbane.

“Another factor to consider is that Coronation Drive is home to a heavy component of older, lower-graded C and D stock buildings, which would require significant investment to compete with new commercial builds,” Mr Greene said. Proximity to the Brisbane River, Brisbane Riverwalk and water views enhance its attractiveness for residential conversion.

“This makes it much more financially viable to look at adaptive reuse instead.”

Mr Greene noted similar transformations had already unfolded at interstate city-fringe precincts including Hyde Park in Sydney and St Kilda Road in Melbourne.

“If you look at Coronation Drive and St Kilda Road, for example, you can draw a fairly direct comparison,” he said.

“Both were developed around the same time in the 1980s, both had an initial commercial focus and both have factors that lend themselves ideally to residential development, such as proximity to water.

“St Kilda Road has access to green space, cultural institutions and easy access to the CBD and now has some of the most expensive residential apartment offerings in Melbourne.

“The residential conversion also coincided with re-centralisation of tenants back into the CBD into new developments in the CBD and Docklands.

“Coronation Drive doesn’t have a lot of the amenity that is required to attract workers back to the office, but what it does have is proximity to the river, river walk, water views and easy access to the CBD and Southbank, which makes it ideal for residential.

“A number of the buildings are also higher than would be allowed to be built today with new planning restrictions introduced since their construction to protect view corridors.”

Leigh Warner, JLL’s Senior Director – Research noted many of the buildings in the Coronation Drive hub were already owned by residential developers, which would ease the transformation to residential.

He said more broadly, developers eyeing older office buildings with a view to turning them into new homes was likely to happen more and more across Brisbane.

“There are definitely a lot of commercial buildings that are under-utilised in some of the best-located city areas like Coronation Drive,” he said.

“Changes in lifestyle, the growing number of empty-nesters plus the higher prices of homes are making conversions extremely attractive.

“And contributing to the fabric of the city with adaptive reuse is so much more environmentally sustainable than demolition and rebuild.”

While converting offices to residential requires more than a quick interior fit-out, Mr Greene said there were specialist turnaround techniques to change older office buildings into successful residential complexes and apartments people would want to invest, own, and live in.

“It’s probably no more expensive to convert offices to residential than it is to convert them to A-grade assets, and the returns could be so much greater,” he said.

“I think we’ll be seeing a lot more of this happening in future.”