JP Morgan Asset Management has listed luxury Melbourne mall, St Collins Lane at a significant discount on the price it paid three years ago.
JP Morgan paid $247 million for the asset, at 260 Collins Street, in November 2016. Then vendor, LaSalle Investment Management, offloaded the centre following a $30 million refurbishment on the ageing “Australia on Collins” mall.
JP Morgan is now divesting a 100 per cent interest in the asset for around $150 million, sources said.
The “one of a kind” retail precinct attracted international flagship stores including global UK fashion brand Reiss on re-opening in mid-2016, but has since struggled with high vacancy rates across its four levels, with a reported 45 per cent vacancy rate in 2017.
The 9,301sq m premium retail centre in Melbourne’s “Golden Mile” comprises about 45 specialty tenants, dining precinct and a mix of prominent luxury fashion and lifestyle brands.
CBRE’s head of retail markets Simon Rooney, said the centre’s Collins Street address, combined with its significant value-add potential, would generate significant interest from both local and offshore investors.
“Premium CBD retail assets are always tightly held, rarely traded and continue to be one of Australia’s most pursued retail investment opportunities,” Rooney said.
The recent closure of anchor tenant Debenhams in the wake of its departure from the Australian retail market, far from adding to the mall’s woes, offers significant upside potential for an incoming purchaser, Rooney said.
“We anticipate an extremely competitive domestic and international buyer pool for St Collins Lane, particularly in light of the unique opportunity to reposition the centre and undertake a highly strategic tenant re-mix following the recent departure of Debenhams,” Rooney said.
And despite a persistent challenges in the retail sector—including a downturn that saw unusual numbers of store closures and retail collapses this year—Rooney said St Collins Lane’s underlying retail fundamentals remain strong, supported by more than 240,000 predominantly white-collar workers within a one kilometre radius of the centre, together with above-average retail expenditure per capita.
“St Collins Lane draws from one of the largest retail catchments in Australia, with an annual retail expenditure pool of $67.9 billion, which is forecast to experience robust growth of 4.3 per cent per annum to 2036,” Rooney said.
The St Collins Lane listing comes as the expressions of interest campaign closed on Thursday for another Golden Mile landmark—the 2,232sq m David Jones-owned 299 Bourke Street; GIC is also looking to offload its Myer Melbourne store in the heart of the Bourke Street Mall.