This article is from the Australian Property Journal archive
THE market for Australia’s embattled CBD shopping centres will be tested with St. Collins Lane in Melbourne hitting the market for the third time in six years, ahead of a major redevelopment.
The 9,000 sqm mall occupies a strategic CBD site on Collins Street, within one of the city’s most trafficked retail destinations, but has struggled over the years to attract shoppers and suffered from high vacancies and failed tenancies, including that of Britain’s largest department store Debenhams.
JP Morgan Asset Management acquired St Collins Lane late in 2016 for $247 million from LaSalle Asset Management, who had spent $30 million overhauling what previously the dated Australia On Collins mall, looking to add a high-end retail hub in the heart of the city following the opening of the Myer Emporium and debut of Swedish fast fashion giant H&M. In a reflection of the asset’s struggles and the harsh retail conditions of the COVID era, it reportedly sold the asset to joint venture partners Vantage Property and Credit Suisse Management for about $125 million in 2020.
CBD retail assets have been particularly hit hard during the pandemic as cities were left emptied of office workers and the base of day-to-day trade.
However, the centre could be set for a brighter future. St. Collins Lane will be undergoing a major redevelopment which is due to commence in the June quarter of 2023 that will deliver a brand-new food hall, fashion precinct and commercial office space, and Melbourne is gradually emerging from a particularly troubled pandemic experience.
Colliers’ Lachlan MacGillivray, together with Nick Rathgeber and Leigh Melbourne of Cushman and Wakefield have the St. Collins Lane listing.
“Investors are rarely presented with the opportunity to acquire a 100% interest in prime CBD retail assets within Australian capital cities,” MacGillivray said.
“Collins Street attracts customers with a high-spend profile. The competitive leasing environment, high occupancy rates across the Melbourne CBD and strong daily visitation offers investors an exciting canvas for strategic remixing.
“Following the departure of Debenhams in 2020, successful negotiation achieved through hard work from the vendor over the past 12 months has allowed for maximum flexibility, with the current vacancies offering investors a major opportunity for a significant repositioning of St. Collins Lane.”
The agents say the listing is “attracting strong interest and multiple offers”.
Colliers September quarter data shows that footfall and occupancy continue to rebound across the retail sector as a whole, with current occupancy levels for retail assets sitting at 98.53%, up from 98.44% in the period to December 2021.
Melbourne took the dubious unofficial title of the world’s most locked-down city during the pandemic; however, the Victorian government has also now scrapped its working-from-home recommendations and mandatory isolation requirements and there is expectation CBD visitation numbers will rebound in the spring and summer months.
The city is expected to become the most populated city in Australia by 2029.
Expressions of interest close Thursday, 17th November.
St. Collins Lane’s redevelopment comes as landlords look to reposition retail outlets across the city.
Newmark is redeveloping the former David Jones menswear store on Bourke Street Mall, which will include Mecca fronting Bourke Street and Clemenger in the upper-level office floors, as well as a new experiential store by Rodd & Gunn.
Steadfast Capital and Shorea Capital have just started redevelopment of the Walk Arcade, which will comprise three retail levels offering over 6,000 sqm of space, sitting below the 450-room dual-brand hotels, Hotel Indigo and Holiday Inn.
