US pension giant California Public Employees’ Retirement System (CalPERS) is selling the luxury St Collins Lane shopping centre in Melbourne’s CBD, which is expected to attract strong interest from both local and offshore investors.
CBRE’s head of retail capital markets – Pacific Simon Rooney has been appointed exclusive agent to steer the international sale campaign.
Rooney said the asset is situated within Melbourne’s ‘Golden Mile’ in one of the most sought-after locations fronting Collins St and CBD retailing is consistently a strong performer.
The asset is expected to sell in the mid to high 100s, in excess of $150 million.
He added that the departure of UK department store Debenhams, which occupied 3,600 sqm, makes the asset more attractive by allowing the new owner to reposition the asset.
“Premium CBD retail assets are always tightly held, rarely traded and continue to be one of Australia’s most pursued retail investment opportunities. 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 Debenhams departure from the Australian retail market and its St Collins Lane tenancy provided significant upside potential for an incoming purchaser and the ability to undertake a planned and multi-faceted re-leasing strategy to capitalise on continued and significant demand from ‘new entrant’ retailers and the centre’s high-profile location, linking through to Melbourne’s Bourke Street Mall.
Opened in mid-2016, the 9,301 sqm centre comprises approximately 45 specialty tenants and includes a fast-casual dining precinct and a mix of prominent luxury fashion and lifestyle brands.
Earlier this year, CBRE secured 12 new tenants including German camera maker Leica, Shujinko, Poke Work Shop, Sushi Boto and Meat the Challenge, Neil Perry’s Burger Project and Saint Dreux, boutique retailer Claudie Pierlot, watch companies Bremont and Tag Heuer, and fashion labels Birkenstock, Coach and Zadig & Voltaire.
This will be the third time the asset has changed hands within the past decade after Thakral Holdings sold the complex, previously known as Australia on Collins for $64 million, in a packaged deal with the Novotel Melbourne hotel to LaSalle Investment Management in 2011 for total of $204 million.
LaSalle spent $200 million to reposition the retail centre into a luxury destination and in September 2016 it sold the hotel component to Frasers Hospitality Trust for $237 million, followed by the redeveloped St Collins Lane in November to JP Morgan, acting on behalf of CalPERS, for $247 million.
Rooney said St Collins Lane’s strong underlying retail fundamentals were supported by over 240,000, predominantly white-collar workers within a 1km radius of the centre, together with strong retail expenditure per capita of $15,563, 6% above the Australian average.
“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 annum to 2036.
“This is underpinned a captive trade catchment of an affluent surrounding worker market, a bustling tourism market with 35.8 million visitors to Melbourne in the year to June 2019, providing retailers the opportunity to benefit from longer trader hours and diverse customer base.” Rooney concluded.