Block Arcade goes on the block

MELBOURNE's iconic Block Arcade on Collins St has been put on the market for the first time in 20 years with an asking price of $100 million – significantly higher than the last trading price of $7.85 million.

Colliers International’s capital markets and investments services managing director John Marasco and Allard Shelton’s director Patrick Barnes are selling the asset via an international expressions of interest campaign closing Thursday April 3 at 4pm.

The L-shaped Block Arcade has two major street frontages and entrances to Collins and Elizabeth streets, with a third entrance via Block Place. The complex is fully leased to 27 retailers and there are also four upper floors of office accommodation, proving a total net lettable area of 8,124 sqm.

The Block Arcade has a long history dating back to 1837, when the site was one of Melbourne’s very first land auctions, sold under the hammer by auctioneer Robert Hoddle on June 01 1837 for a bank-busting sum of 18 pounds ($36).

The site had many uses including as a grain store for William Briscoe & Son, however it was not until 1892, that the property came to life as an upmarket destination for affluent Melbournians, when the Georges store opened.

It was the first Georges Store in Melbourne and cost 46,233 pounds ($92,466) to build. In September 1889, it was ravaged by fire, but shortly after, it was rebuilt and modelled on the Galleria Vittorio in Milan, Italy.

Over the decades, the property changed hands several times. Finally, in 1991 Westpac Bank became mortgagee in possession of the asset and sold it at public auction in 1993 to the late Queen’s Counsel John Kearney, AM, for $7.85 million.

John and his wife Alison Kearney are life members of the National Trust and the National Gallery of Victoria. He became a Member of the Order of Australia in 2005. The couple shared a love for preserving Melbourne’s heritage buildings.

He passed away in October last year.

Allard Shelton’s Patrick Barnes, who has managed the property for 20 years, said the property presents purchasers with the opportunity to secure a Collins St trophy investment as well as the exciting prospect of steering The Block Arcade through the next chapter of its celebrated history.

“The Block Arcade has an unprecedented 120-year successful retail trading history and there is a waiting list of tenants trying to secure space in the centre.

“It is much-loved by Melbournians and has a loyal following of local shoppers. It is also a popular tourist destination for interstate and international tourists, attracting more than 3.5 million visitors during 2013,” he added.

Current retail tenants include Telstra, Orrefors Kosta Boda, Hopetoun Tea Rooms, Haighs Chocolates, Hunt Leather, Crabtree & Evelyn and Wittner. The office floors are leased to professional services and administrative bodies.

Colliers’ John Marasco said offers a number of exciting value-add opportunities including repositioning the asset to attract luxury retail brands to the precinct.

“Collins St is arguably Australia’s premier retail destination for luxury retail brands such as Louis Vuitton, Gucci, Prada, Bvlgari, Ralph Lauren, Giorgio Armani, Hermes, Ermenegildo Zegna and Tiffany & Co, just to name a few.

“The Block Arcade is well positioned to capitalise on demand from luxury retailers trying to secure tenancies along Collins St,” Marasco said.

Following in the footsteps of other luxury brands, French fashion house Dior recently announced it would open its first store in Melbourne, leasing 200 sqm at 209 Collins St, taking over Chanel’s old home, on the ground floor of the Westin hotel, which is just 260 metres away from the Block Arcade. And Hermes has secured a 200 sqm store at Harley house on the corner of Exhibition and Collins streets, while other labels are also looking to get a foothold into the city including Fendi, Chloe, watchmaker IWC, Versace, Miu Miu and Jimmy Choo.

“We expect interest from local and overseas investors from Asia, Europe and the US,” Marasco said.

Property Review