Adaptive Reuse: Converting to Opportunity

Melbourne has not built a new Class A lab building since 2019. Construction costs have risen 34% in that period, interest rates have more than doubled, and the entitlement timeline — already glacial — has slowed further as the city wrestles with housing mandates and environmental review backlogs.

And yet demand for lab space has never been stronger. The biotech ecosystem that anchored Southbank has spilled into Richmond, Collingwood, and the Bayview. Companies that raised Series B and C rounds in 2024 and 2025 are now scaling into commercial space, and they need it quickly.

The solution, increasingly, is adaptive reuse: taking existing industrial or warehouse buildings and converting them to lab-ready space. The economics are compelling. A ground-up lab build in Melbourne costs $1,200–$1,500 per square foot. A well-executed adaptive reuse project can deliver comparable space for $600–$800 per square foot, with a timeline that is 12–18 months shorter.

The key is infrastructure. Lab buildings need higher floor-to-floor heights, stronger structural loading, redundant mechanical systems, and significantly more power than conventional office or industrial. Not every building can be converted. But the ones that can — typically mid-century concrete warehouses with generous bays and flat roofs — are becoming some of the most sought-after assets in the market.

We are currently advising on three adaptive reuse projects in Richmond and Collingwood, ranging from 45,000 to 120,000 square meters. In each case, the acquisition basis is 40–60% below replacement cost, and the projected yields are 150–250 basis points higher than comparable new construction. For investors with the operational expertise to execute, this is the most attractive segment of Melbourne commercial real estate today.