Fund manager Newmark Capital is pressing ahead with plans to redevelop the David Jones menswear store in Melbourne’s Bourke Street Mall.
The redevelopment of the distinctive 1930s pink-tinted building is expected to begin in September after David Jones vacates. Work on the six-storey retail block is due to end in late 2023.
Newmark Capital paid $121 million for the site in late 2020—a 20 per cent discount on the $150 million pre-pandemic price when David Jones owner, the Johannesburg-listed Woolworths Holdings, put the building on the market the year before.
Woolworths Holdings said it had divested the asset to focus its activities on its larger 310 Bourke Street store across the road.
Newmark in February undertook a comprehensive tender process for the project’s builder before selecting Maben Group, which had worked on similar-sized redevelopments and across large CBD projects with heritage complexities.
The construction company has delivered more than 165 projects for Australian clients, including Vicinity Centres, GPT Group and AMP Capital.
Part of the complexity of the project is the building’s upper floors, used for decades primarily as storage, which will now be transformed into large, loft-style office spaces with high ceilings.
Maben Group director Damien Marasco told The Urban Developer the heritage redevelopment would involve the business’s top team, as well as hand-selected subcontractors experienced in working on existing structures, to respond quickly to issues that might arise when redeveloping an older building.
“When it comes to working on important, heritage-listed buildings, communication and dedication to the project really play a pivotal role, across all levels of the team,” Marasco said.
“Programming and procurement is a major consideration, as with new builds we can rely on drawings when procuring items such as escalators.
“But, when working with an existing structure, we need to wait until we can expose existing conditions before site measuring. This can lead to serious risk if we don’t get this right in the earlier stages.”
Upon completion, about 900 staff from marketing giant Clemenger Group’s Melbourne-based companies and sister operations under the Omnicom Media Group will relocate from its St Kilda Road office to the 299 Bourke Street building, taking up all 7500sq m of office space across four upper levels.
The ground and first floors will be dedicated to a premium retail offering with Mecca signed to open a flagship store as well as Rodd and Gunn, which plans to launch a bar and dining retail concept fronting Little Collins Street.
Above the five new upper floors Newmark is planning to deliver a rooftop terrace.
Newmark Capital general manager of property Angus Machutchison said the redevelopment of the building, bought in the midst of Melbourne’s lockdowns, would support the post-Covid revitalisation of the CBD’s retail sector.
“Newmark’s previous experience has been focussed on the management and development of contemporary buildings in the retail and office sectors,” Machutchison said.
“The project differs from others as the heritage restoration element is a delicate but integral part of the project.”
Melbourne’s most expensive and tightly held retail strip before the pandemic, the Bourke Street Mall has been hit with historically high vacancy rates—similar to Collins, Elizabeth and Swanston street as well as other CBD shopping strips.
Retail sales have now risen for five consecutive months to a record high in May despite the Reserve Bank of Australia lifting the official interest rate for the first time in more than a decade.
According to the latest data from the Australian Bureau of Statistics, department stores recorded the largest rise in sales in May, up 5.1 per cent and 18 per cent higher on pre-pandemic levels.
Spending on cafes, restaurants, and takeaway food rose 1.8 per cent, though Ben Dorber, ABS’s head of economy-wide surveys, said higher food prices were playing into the increase in spending.
