Newmark plots future for David Jones store
Melbourne fund manager Newmark Capital sealed its $121 million acquisition of the historic David Jones menswear store on Bourke Street Mall on Tuesday with plans to refurbish the building and secure an international retailer when the department store vacates at the end of its lease.
Newmark co-founder Simon Morris said he was confident about the long-term prospects for Melbourne’s premier retail strip as the city endured a second lockdown.
“Not often do we see assets where demand from end-users far outstrips supply,” he told The Australian Financial Review.
The deal reflected a 20 per cent discount to the $150 million pre-pandemic price expectations when David Jones owner, Johannesburg-listed Woolworths Holdings, put the six-storey building at 299 Bourke Street on the market in November.
Two blocks down, at 260 Collins Street, another Melbourne fund manager, Vantage Property Investments is due to acquire the St Collins Lane mall for less than half the $247 million JPMorgan Asset Management paid in 2016.
Mr Morris said international flagship retailers were lining up to lease the building when David Jones’ occupancy expired and the department store consolidated its Melbourne CBD presence into one site across the road at 310 Bourke Street.
“We have very strong retailer and other occupier interest with limited opportunities for true flagship locations in or around the Bourke Street Mall,” he said.
Mr Morris, together with Newmark co-founder Chris Langford, oversees more than $1 billion worth of real estate investments, many of them retail assets including the Jam Factory redevelopment and Como Centre on South Yarra’s Chapel Street.
Newmark will acquire the 1930s David Jones building with its distinctive pink-tinted facade for a new standalone trust backed by high net worth investors.
The deal is expected to settle in August.
When David Jones vacates in a few years’ time, Newmark will refurbish the building with plans to revitalise not just the retail levels, but also the office floors, which have been used by the retailer to store stock and for staff amenities.
For David Jones, the deal will also allow the struggling retailer to reduce debt as it restructures its Australian business to have a smaller real estate footprint.
“The divestment of 299 Bourke Street Mall will allow us to focus on the optimisation of our larger 310 Bourke Street store and deliver a more cohesive and elevated single store experience in Melbourne’s CBD while simultaneously paying down debt as part of our ongoing debt reduction strategy,” David Jones CEO Ian Moir said.
CBRE’s Simon Rooney and former CBRE agent Mark Wizel negotiated the sale while JACX Property acted as transaction manager on behalf of David Jones.
“The highly unique offering of 299 Bourke Street attracted significantlevels of international and domestic interest and enquiry, resulting in genuine bidder depth, reflecting one of the most competitive retail campaigns for an asset of this size and nature,” Mr Rooney said.
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