Much-maligned Chapel Street is sizzling hot with property plays

On the portion of the strip from South Yarra to Windsor, retailers are strategically positioning themselves for a bright new era once the $3.75 billion Jam Factory redevelopment is completed by Tim Gurner and Qualitas.

The Prahran Chemist Warehouse building at 370-372 Chapel Street (which is actually in South Yarra) is on the market for the first time in nearly 40 years with an asking price of about $10 million – a value largely reliant on income from its high-profile tenant.

The vendor paid $960,000 for the 520-square-metre shop in 1987. It’s on the corner of Bray Street on a 376-square-metre parcel of land with 18 metres of prime Chapel Street frontage near the Malvern Road intersection.

But at the same time, Chemist Warehouse – which listed on the Australian Stock Exchange in February in a $30 billion plus merger with Sigma Healthcare – has slapped a fresh “opening” sign on a shopfront across the street at 357-359 Chapel Street.

A syndicate of Chemist Warehouse associates last year paid $5.39 million for the empty 609-square-metre shop through Aston Commercial’s Jeremy Gruzewski, Sebastian Origlia and Fred Nucara. It’s on a 435-square-metre site and while appealingly larger, does not have great rear access.

Capital Gain wonders if it has lost interest in the store at 370-372, which it long hankered to purchase, or is this new “opening” a move to fend off the competition?

But wait, in yet more strategic moves – keep your eyes on the Monopoly board – a Chemist Warehouse property syndicate bought 374 Chapel Street, which is next door to the existing Prahran store, paying $2.15 million at a Burgess Rawson Portfolio Auction. The 227-square-metre shop is leased to Mexican restaurant Zambrero until June 2028, but could make the existing store – with its $10 million price tag – more than a third larger.

Does that mean Chemist Warehouse wants to whiz past Go and consolidate the properties?

With Chemist Warehouse’s lease at No.370-372 having a good four years left to run, the retailer is not moving any time soon so it may be a while before we know which side of the strip it eventually lands on.

Jones Real Estate’s Paul Jones, who is selling the Chemist Warehouse-occupied property with Luke Peric and Mimi Hoang, said recent Chemist Warehouse deals in Oakleigh and Ivanhoe were struck at yields of 2.5 to 3 per cent. This one returns $266,173 a year in rent and has a leasing option to 2034.

The billionaires behind the chemist giant made even bigger property moves recently.

In July 2024, they paid $15 million for property developer Bill McNee’s NAB branch at 600 Chapel Street, on the corner of Toorak Road. And, just a short 10-minute drive from Chapel Street, Chemist Warehouse co-founder Jack Gance this week reportedly purchased an $80 million-plus mansion in Toorak, Melbourne’s equivalent of Monopoly’s Mayfair.

Further down the street in the Prahran part of the strip, another much-anticipated deal suffered a hangover. Nightclub complex, Revolver, situated at No.229, passed out (sorry, passed in) at auction last Friday for $15 million through JLL and Christies International.

Negotiations are ongoing but observers noted Banco Group owner Mario LoGiudice was the highest bidder.

Elsewhere on Chapel, a shop owned by fashion maven Fiona Scanlan at No.88 in Windsor sold for $3.35 million. Once the much-loved Sacred Heart op shop, the building has been leased to advertising firm Howatson+Company for the past few years.

The creatives pay a bumper $210,000 annual for the space which gives the deal a soft 6.2 per cent yield. However, it’s understood they’re expanding and likely to move. Stonebridge agents Rorey James, Nic Hage and Ian Lam did the deal.

In September, Stonebridge sold 566 Chapel Street for Gary Theodore, of Scanlan & Theodore for $2.92 million.

And last month, a local investor snapped up two shops at 467 and 469 Chapel Street which developer Sterling Global had earmarked for a skinny hotel project, paying $3.2 million.

The deal was done before their scheduled auction through Fitzroys’ Chris James and Lewis Waddell.

Church cannon

Over the river, property developer, philanthropist and honorary consul of Monaco, Andrew Cannon, scored a premium at auction last week selling an office at 1 Albert Street, off Church Street.

Despite the driving rain, about 50 people turned out, with four bidders pushing the price to $2.702 million – $302,000 above the reserve.

The 362-square-metre office was home to Monaco’s consulate before Cannon built a new one in the CBD overlooking the Melbourne Club.

Cushman & Wakefield’s Anthony Kirwan, George Davies and Raphael Favas handled the auction.

Across the road in Cremorne, the team is selling a two-storey 300-square-metre warehouse behind East Richmond station at 15-17 Adolph Street.

Gilles Arbes-Dupuy, the French founder of menswear retailer Declic, is selling the property and moving back to France though the business remains.

Records show the Arbes-Dupuy family paid $1.155 million for the property in 2009. It’s on 167-square-metres of land and expected to fetch about $2 million.

Off market deal

Meanwhile, Michael Spektor’s National Retail Group – part-owned by the same property-buying enthusiasts at Chemist Warehouse – has made an off-market purchase in South Melbourne.

The group has paid $4 million for a warehouse at 75-85 York Street on behalf of a private family office – not Chemist Warehouse related, Spektor stressed.

The commercial-2 zoned 466-square-metre site is one of the last island sites left in South Melbourne and has been leased to Factory Sound for the last 30 years.

The vendor, investment fund Terraplex paid $4.41 million for the site in 2021 and obtained a planning permit for a six-level mixed use project.

Spektor said there were no immediate plans to redevelop the site. The off-market deal was negotiated by RWC MC’s Ted Dwyer.

Uni buys office

The University of Melbourne has made its first property purchase in several years, buying 33 Lincoln Square South in Carlton for $17.8 million.

The four-level 2965-square-metre building office was bought from CareSuper, which recently merged with the Meat Industry Employees super fund. The MIESF paid $7.9 million for the property in 2007.

It’s a bumper price for vacant strata office with four apartments on the top floor. The building was previously headquarters for the Save the Children Foundation.

JLL agents Tim Carr, Josh Rutman and MingXuan Li negotiated the deal but declined to confirm the buyer, who declined to tell Capital Gain what plans it has for the site.

It’s next door to 27-31 Lincoln Square South, the former Allan & Co piano factory and warehouse which JLL is also selling with a permit for a 14-storey tower. It’s expected to fetch in the low $20 millions.

Meanwhile, Monash University has signed a new city-fringe leasing deal, taking 6754-square-metres across two floors at Sunkin’s 509 St Kilda Road.

The uni, which likes to maintain a significant presence in the Alfred Health precinct, is moving from No.553 where it shares an awkward space with the US consulate.

It’s the biggest leasing deal done on St Kilda Road since 2021 and was negotiated by Colliers’ Matt Cosgrave with JLL’s Peter Walsh and Ed Hill representing Monash.