Our client wanted a multi-tenanted commercial asset with built-in upside — something where the income at purchase did not reflect the true earning capacity of the property. They were comfortable doing the work post-settlement to unlock value, provided the underlying asset was sound and the location supported rental growth. The brief was clear: secure a property where the gap between current rent and market rent was wide enough to create a meaningful shift in valuation within the first twelve months of ownership.
We targeted larger-format retail and warehouse assets on the Sunshine Coast where asking rents had moved well ahead of in-place rents. Buildings with multiple tenancies under a headlease are ideal for this strategy — the income is tied to a single lease instrument, and when that lease allows for review, the owner can bring the entire rent roll to market in one negotiation. Across a sizeable floor area, even a moderate increase per square metre compounds into a significant income shift. If you can acquire at a price anchored to the lower income and then bring rents to market, the capitalised value moves dramatically — often within months of settlement.
We identified a 1,633m² retail and warehouse building in Burnside on the Sunshine Coast — five separate tenancies operating under a single headlease with a five-year term and two five-year options. The tenancy mix included trade supplies, fitness, food service, and professional office space, giving the income base diversity and resilience. The building had recently had the roof fully replaced and featured brick and rendered construction with multiple roller doors and personal access points.
It sat on a busy thoroughfare just minutes from the Nambour central business district, within a Medium Impact Industry zone surrounded by established commercial operators. The property was generating approximately $121,000 per annum in net rent — around $74 per square metre, well below where the market was sitting for comparable space. We secured the acquisition at $2.1 million on a 5.71% yield, with the price reflecting the under-rented income rather than the property's true earning capacity.
Within six months of settlement, our client renegotiated the headlease to bring rents in line with the market — lifting the net income from approximately $121,000 to over $222,000 per annum. Across the full 1,633m², that moved the effective rate from $74 to around $136 per square metre. Capitalised at a 6% yield, the revised valuation came in at approximately $3.7 million — an equity uplift of $1.6 million from the acquisition price, achieved without a single dollar of capital works. The building's recent roof replacement, solid construction, and diverse tenancy mix meant there was no deferred maintenance to eat into returns. The entire uplift came from one thing: recognising that the rent did not reflect the asset's true position in the market, and having the conviction to act on it.
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