Colliers International expects coveted retail asset to fetch $40million-plus
The Bourke Street Mall’s most coveted retail asset has hit the market with price expectations of more than $40 million.
The striking, classically styled building at 274 - 278 Bourke Street was constructed in 1859 and has been owned by the same private Melbourne family since 1955.
The property is situated in the heart of the Bourke Street Mall, surrounded by major retailers David Jones, Myer, Zara and H&M, and is leased to two national retail tenants, Swarvoski and Windsor Smith.
Oliver Hay, Matt Stagg, Daniel Wolman and David Sia, of Colliers International’s Melbourne City Sales team, have been exclusively appointed to launch an International Expressions of Interest campaign closing Friday June 8 at 3pm.
“The Bourke Street Mall is the most exclusive and tightly held retail precinct in Australia,” Mr Hay said. “There are only 13 freehold Bourke Street Mall properties with only one freehold trading in the last decade.
“The exclusive offering will be presented to local and international high net worth private investors and family offices seeking an intergenerational investment."
The Bourke Street Mall is the City of Melbourne’s traditional retail heart. City of Melbourne statistics indicate the Bourke Street Mall attracted more than 20 million visitors and over $1 billion of retail sales for the year ending 2017.
“Following Melbourne’s recent influx of offshore investment, population growth, international students and tourism, the Bourke Street Mall is now viewed in a global context,” Mr Hay said. “International retail brands with flagship stores in other capital cities throughout the region such as Sydney, Singapore, Kuala Lumpur, Hong Kong, Tokyo, Seoul, Shanghai and Beijing are also competing to secure a presence in the Bourke Street Mall.
“This has resulted in record rental growth over the past three years for tenancies with prime frontage. The most recent retail leasing deals to the Bourke Street Mall include; Pandora, Foot Locker, Sunglasses Hut and Optus which have been struck at rents of between $9,200 and $12,000 per square metre net."
Mr Stagg said institutional and high net worth private investors, both local and international, were also actively seeking to secure a position and were strategically acquiring assets along Bourke Street.
“During the past 12 months, we have sold six Bourke Street properties with a total value of more than $300million,” he said. “However, nothing has changed hands within the Bourke Street Mall itself because it is so tightly held."
Major groups with significant holdings along Bourke Street include ISPT, Dexus, Cbus Property, Brookfield and M & L Hospitality, with several billion dollars of retail, commercial and hotel developments underway or planned.
“274-278 Bourke Street is well positioned to benefit from these strong leasing and investment conditions,” Mr Stagg said. “Both Swarvoski and Windsor Smith are leased until October 2021 with no further options, providing the successful purchaser maximum flexibility."
He said the property had the potential to be re-leased at market rents on a long-term lease, or, alternatively, to be refurbished and repositioned. For example, flexible Capital City 1 zoning could enable the development of the upper floors and air-rights to be explored.
“The building’s stunning façade and underutilised upper levels make it ideal for the successful purchaser to transform into the Melbourne CBD’s next multi-level retail icon, comparable to other premium stand-alone retail CBD investments such as Pandora (280 Bourke Street Mall), Zara (284 Bourke St Mall), Louis Vuitton (139 Collins Street) and Chanel (140 Flinders Lane),” Mr Stagg said.