UPDATE 1PM: Devastated members of the Maroochy Beach Gymnastics Club have watched their clubhouse crumble as it was gutted by fire.
Sparks from overhead welding are believed to have ignited gymnastics mats.
Club president Peter Dwan said no gymnastics were taking place when the fire ignited about 11am.
Mr Dwan said construction workers were in the demolition phase of a near $2 million renovation of the facility.
He was emotional as he detailed the toll the fire would have on club members.
The building had stood since 1985.
"It couldn't be any worse," Mr Dwan said.
"We are just absolutely devastated.
"Now we have got to work towards rebuilding."
He said 1000 kids used the gym every week.
"I didn't think it was a severe as it was until I drove down the road and saw the gym."
Mr Dwan said he would reach out to the community to see where they could house gymnastics activities.
He guessed the club had lost hundreds of thousands of dollars in equipment.
"We've got kids getting ready for competition.
"We've lost everything.
"We are going to have to find a facility just to train in."
He said a lot of equipment had been purchased after club members' fundraising efforts.
"We had some state-of-the-art equipment for Commonwealth Games athletes to come and train in January so it's a huge shame."
However, he said some of the club's memorabilia had been moved off-site before the renovations started.
"Some things were stored in there, we will have to assess that to understand what we have lost."
He was shocked that the fire may have been started by a welding incident.
Queensland Fire and Emergency Service Maroochydore officer Inspector Cameron Herbert said initial investigations were showing that the fire was sparked by a workplace incident.
"(It was) Possibly something to do with welding, but that's being further investigated," Insp Herbert said.
He said flames were reaching up to 30m above the building when crews arrived.
A lot of foam material inside the gymnasium contributed to the thick plume of toxic black smoke.
"All firefighting crews did a great job just to contain it to this one structure."
A worker on site for builders BBN Constructions offered no comment.
A Workplace Health and Safety Queensland spokesman said initial inquiries indicated sparks from overhead welding ignited gymnastics mats.
He said the matter was being investigated.
11AM: Fire has engulfed a building on the Sunshine Coast sending black smoke billowing over the region.
The fire is located at the Maroochy Beach Gymnastics building on Wises Rd, Buderim.
The building has all but been destroyed.
Queensland Fire and Emergency Services are on scene attempting to protect surrounding buildings.
It is understood everyone was out of the building when fire broke out.
Construction was taking place at the building, which is currently surrounded by temporary security fencing.
Queensland Fire and Emergency Services said multiple crews were on scene at the large gym shed fire at Wises Road, Buderim.
"Firefighters are working to contain the blaze and protect surrounding properties. The fire is generating a large amount of smoke in the area and may affect Buderim and Maroochydore this afternoon," the QFES advised.
"Residents should close windows and doors and keep medications close by if suffering from a respiratory condition. Smoke can decrease visibility, so please drive with caution and to conditions if travelling in the area."
Maroochy Beach Gymnastics Club
The centre of excellence for gymnastics on the Sunshine Coast, is a not-for-profit sporting association that has been delivering gymnastics since 1975.
It was awarded Sunshine Coast Sports Federation "CLUB OF THE YEAR" in 2015.
The club had only recently launched a fundraising campaign for the new building to help continue its success which has included State Level Champions, Sunshine Coast and Queensland State representatives.
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