NEWMARK Capital has partnered with developer Tim Gurner and real estate fund manager Qualitas to reinvigorate its $1.4 billion plans for an overhaul of the mixed use Jam Factory precinct in Melbourne.
Located in the inner suburb of South Yarra, the Jam Factory is home to a cinema complex and shopping centre on a 19,250 sqm site, and is now planned to feature 20,000 sqm of retail space, 20,000 sqm of offices, a hospitality and entertainment precinct, a 170-room hotel, and between 550 and 650 luxury apartments.
Newmark acquired the complex in 2015 for $165 million, and in 2017 revealed plans for a comprehensive development dominated by 50,000 sqm of new office space across multiple buildings, and redevelopment of the retail, cinema and food and beverage complex.
The revised planning scheme is expected to be in front of Stonnington Council by mid-year, and launched at the end of 2021. Construction is slated to begin early next year and completed by 2025.
The Jam Factory is positioned on Chapel Street, in the past one of Melbourne’s most popular shopping precincts but now suffering from a high number of empty shops. The softened retail environment and development of multiple office towers close by are believed to have forced Newmark to rethink its plans.
Gurner and Qualitas teamed up last year that saw the Qualitas Real Estate Opportunity Fund 2 tip in $150 million to back future acquisitions as the developer anticipated more distressed assets hitting the market. They will put about $75 million of equity into the project, take on part ownership of the complex and jointly develop with Newmark.
Gurner has made a name for its high-end apartment developments, and its growing pipeline now has an end value of circa $7 billion. It has also partnered with Qualitas on a $1 billion build-to-rent fund.
Newmark also owns the nearby Como Centre on the corner of Toorak Road, which it acuqired from Mirvac in 2016 for $236.5 million. The funds manager has a track record of acquiring and repositioning commercial assets. Last year, it bought the David Jones menswear store in Melbourne’s CBD for $121 million with plans to reposition the Bourke Street Mall building. In 2017, it gained a windfall from the $145 million sale of its refurbished A-grade office building at 417 St Kilda Road, via a managed syndicate that had acquired it for $81 million just five years earlier.
Gurner described The Jam Factory is Melbourne’s last remaining significant inner-suburban regeneration site, and the deal and project as “the most important contribution to Melbourne any developer could make, given the history and importance of the Jam Factory to Melbournians, at a time when Chapel Street is desperate for change and rebirth”.
“We have the scale and location here to do something that is not possible on any other site in Melbourne,” he said.
Newmark’s joint managing director and former AFL footballer, Chris Langford, said the project would unlock the potential of an iconic site.
“It will create Australia’s best mixed use development precinct, bringing to life a vision of a place to live, work, play and stay.
“Our desire is to restore the status of the Jam Factory and Chapel Street, with authenticity, creativity, and community at its core.”
The partners are expecting to appoint architects to the project shortly.