This article is from the Australian Property Journal archive
DEPARTMENT store David Jones has snubbed Westfield’s Fountain Gate shopping centre because the customer base is not “high value†and therefore no longer aligns with the retailer.
David Jones signed a 25-year lease in 1996 at the centre located in Melbourne’s outer south-eastern suburbs, and since 2003 it has tried to get out of Fountain Gate. And until last Friday Westfield had refused to let David Jones off the hook.
But Westfield will not be scrambling to find a tenant to fill the space because Myer has announced that it will lease 12,000 sqm.
Under the arrangements agreed David Jones will receive value in excess of the payment made to Westfield in 2003 when the Fountain Gate lease was re-negotiated (adjusted for inflation) and will have an option to open a new department store at the Westfield Innaloo development in northern corridor of Perth.
The $9.8 million (adjusted for inflation) that David Jones receives from Westfield will take the form of capital expenditure funding in projects in Westfield centres (including Kotara and Innaloo), as well as payment in the final stage of the Centrepoint retail development to compensate David Jones for disruption as the air bridges between Centrepoint and David Jones Elizabeth and Market Street stores are replaced between August and October 2010. The air bridges will be replaced at no cost to David Jones.
“We are pleased to have terminated our Fountain Gate lease on acceptable commercial and strategic terms. We have known since our 2003 strategic review that the demography of the Fountain Gate centre is not aligned with our target customer and does not fit in with our new store strategy,” David Jones new CEO Paul Zahra said.
Meanwhile Myer will build a two level, 12 000 sqm store as a part of the Fountain Gate Shopping Centre redevelopment which is expected to begin in 2011 with the opening scheduled for 2012.
Myer CEO Bernie Brookes said that Fountain Gate had been a sought after location to build a new store.
“There are very few locations in Australia that present retailers with such a golden opportunity to grow and expand their business.
“The centre is well established, it has turnover exceeding $700 million and it is located in the middle of one of Australia’s fastest growing growth corridors – an area that services more than 360,000 people,” he added.
“When the redevelopment is finished Fountain Gate will be one of the biggest shopping centres in the country. We’re delighted to have secured a prominent part in it,” Brookes continued.
Australian Property Journal