ONE of the commercial property sector's biggest open secrets has finally been confirmed. Austexx is moving the Spencer Street DFO to its huge new development at South Wharf in less than a fortnight, ending more than two years of speculation about the future of the retail precinct.
DFO Spencer Street, henceforth to be known simply as Spencer Street, will be turned into a full-price shopping centre on October 15. That same day, Austexx will open the doors to its 60,000 square metre DFO and home-maker centre in South Wharf.
While many of the more than 100 tenancies will be the same in the relocated DFO, Austexx has reportedly sought a greater mix of premium national and international fashion outlets for the 27,000 sq m South Wharf location.
A slew of high-profile furniture, electronics and bulky goods retailers have also signed on to the 33,000 sq m home-maker centre which is now 80 per cent leased including JB Hi-Fi, Provincial, Good Guys, Nick Scali, House and Forty Winks.
JB Hi-Fi chief executive Richard Uechtritz said they chose to open in South Wharf because it was likely to dominate the under-supplied inner-city region. There's not a close home-maker centre anywhere around the city and the inner suburbs . . . it's a one-stop shop for that, Mr Uechtritz said.
Austexx said it would open a dining and lifestyle precinct in South Wharf in the new year, and plans were also under
way for a boutique cinema.
Industry insiders have long expected Austexx would move the DFO to South Wharf in a bid to open up Spencer Street to traditional retailing that would command higher rents.
Stores will slowly roll out their own refits and Austexx will ultimately upgrade and refit the entire Spencer Street building, said Frank De Rango, managing director of Austexx.
Austexx declined to comment on the rents at Spencer Street or South Wharf.
Metro for Richmond
METRO Trains Melbourne, the consortium that ousted Connex to gain the job of running the city's public-private train network, is reportedly close to taking up to 6000 square metres of office space in Richmond.
MTM is believed to have chosen two or three floors at 43 Elizabeth Street to be the new headquarters for the group, which will run the city's trains from November 30.
But industry sources say the outcome of any deal is likely to hinge on what becomes of the space around the city now occupied by Connex including about 3300 sq m at 1 Spring Street and 80 Collins Street which will have to be occupied or subleased as part of the takeover.
The MTM consortium comprises Hong Kong's MTR Corporation, UGL Rail and John Holland. MTM is now operating out of Johnston Street in Abbotsford.
While a MTM spokeswoman confirmed that 43 Elizabeth Street had been considered, she said no decision on new premises had been made.
We've got three organisations coming into one and we're still really working through how much we centralise, the spokeswoman said.
Jones Lang LaSalle, leasing agents for 43 Elizabeth Street, declined to comment. Rents there are advertised at $320 a square metre net.
MTM had also reportedly considered 436 Johnston Street in Abbotsford as a possible headquarters.
Clayton site offered
GREETING card company John Sands is hoping to sell its Clayton North head office and former manufacturing plant in a deal that could fetch upwards of $13 million.
The four-hectare site at 34-60 Clayton Road, which includes six buildings totalling about 20,000 square metres, is being offered with either vacant possession or on short-term lease-back. The company is also reportedly willing to consider committing to at least a 2000 sq m office should the property be bought and redeveloped. Glenn McIlwain, John Sands' executive manager of operations, said that in recent years the company had outsourced its manufacturing and warehousing operations as part of strategy to focus on sales and marketing. We don't need the large site that we're on and we're going to go to a smaller footprint, Mr McIlwain said.
Vinci Carbone director Frank Vinci declined to comment on a potential sale price. Expressions of interest close in mid-November.
John Sands (Australia), originally founded in 1837 as a stationery supplier, is reportedly Australasia's largest greeting card company and is owned by listed parent group American Greetings.
Golf club
shortlist
DEVELOPERS are beginning to circle for the speculated $100 million sale of Doncaster's Eastern Golf Club, with a shortlist of four potential buyers reportedly making second-round offers.
Industry sources say that 10 offers were made during last month's expression of interest campaign, representing many of the same players that have recently been buying up or trying to buy up the city's biggest infill development sites.
Capital Gain can confirm that Mirvac is one of the bidders. Most developers did not respond when contacted about the sale. Of the few that did, Lend Lease, denied making an offer and Far East Consortium and Stockland declined to comment.
Peter Bremner, Colliers International's director of investment sales, also declined to comment on the identity of the shortlist contenders.
The 47 hectare site at 473 Doncaster Road could become a mixed-use precinct, combining shops, offices, medium to high-density residential dwellings and a house/land subdivision.
Bulleen auction
ST GEORGE Bank is holding a mortgagee auction for a prominent corner development site in Bulleen that is expected to fetch about $2 million.
The vacant 2180-square-metre allotment at 164-166 Manningham Road, at the intersection of Manningham and Thompson roads, is zoned Residential 1. The property includes a permit for a four-storey, 37-apartment development with two levels of basement parking.
Colliers International associate director of investment sales Tim Grant said the site had been receiving interest from residential developers, medical professionals, a childcare
group and a religious organisation.
The owners, Chrisdan & Associates, went into receivership in 2008. The auction is on October 22.
Subway by the book
FAST-FOOD giant Subway is one of three franchise tenants for the former Elizabeth Street home of the Melbourne landmark retailer, McGill's.
After the 149-year old newsagency and bookshop closed its doors in June reportedly due to a combination of high rents, dwindling newspaper readership and tough competition from the big book chains the two-storey building at 187-193 Elizabeth Street was subdivided into four tenancies.
Subway, Michel's Patisserie and Wild Cards & Gifts have taken ground floor spaces of 76 to 82 square metres each. The first floor of 240 sq m is still available to a retail or office tenant.
Knight Frank and Teska Carson were conjunctional agents on the property. Knight Frank director Gary Loo said the rents were about $1900 a square metre, about $300 more than the average for that precinct.
The new store will be Subway's 17th in the CBD, and its fourth in Elizabeth Street.
Frequently Asked Questions about this Article…
What is happening to the Spencer Street DFO and when will the South Wharf DFO open?
Austexx has confirmed it is relocating the Spencer Street DFO to its new South Wharf development. On October 15 the existing DFO Spencer Street will be rebranded simply as Spencer Street and converted into a full‑price shopping centre, and Austexx will open the new 60,000 square metre DFO and home‑maker centre at South Wharf on the same day.
What retail mix and size can investors expect at the new South Wharf DFO and home‑maker centre?
South Wharf will comprise about 27,000 sqm of DFO fashion outlets plus a 33,000 sqm home‑maker centre. Austexx is targeting a greater mix of ‘premium’ national and international fashion brands in the DFO space, while the home‑maker centre is already about 80% leased to bulky goods and furniture retailers including JB Hi‑Fi, Provincial, The Good Guys, Nick Scali, House and Forty Winks.
Which major retailers have committed to South Wharf and why did JB Hi‑Fi sign up?
Major tenants signed to the South Wharf home‑maker centre include JB Hi‑Fi, Provincial, The Good Guys, Nick Scali, House and Forty Winks. JB Hi‑Fi’s CEO Richard Uechtritz said they chose South Wharf because it is likely to dominate an under‑supplied inner‑city region—there isn’t a nearby home‑maker centre for inner suburbs, making it a convenient one‑stop destination.
How will the Spencer Street building be handled after the DFO moves and what does that mean for retail rents?
Austexx plans to slowly roll out tenant refits and ultimately upgrade and refit the entire Spencer Street building, converting it to traditional retail that could command higher rents. Austexx declined to comment specifically on the rent levels at Spencer Street or at South Wharf.
Are any leisure or lifestyle amenities planned for South Wharf that could boost centre traffic?
Yes. Austexx said it will open a dining and lifestyle precinct at South Wharf in the new year, and plans are also under way for a boutique cinema—amenities intended to enhance leisure appeal and foot traffic to the centre.
Is Metro Trains Melbourne (MTM) linked to any office leasing activity mentioned in the article?
Industry reports say the MTM consortium (MTR Corporation, UGL Rail and John Holland) is close to taking up to 6,000 sqm of office space and has considered 43 Elizabeth Street for two or three floors as its new headquarters. MTM confirmed 43 Elizabeth Street was considered but said no final decision had been made. Rents at 43 Elizabeth Street are advertised at about $320 per square metre net.
What is happening to John Sands’ Clayton North site and what opportunities does it present for property investors?
John Sands is marketing its four‑hectare Clayton North head office and former manufacturing plant at 34–60 Clayton Road, with expectations the site could fetch upwards of $13 million. The property includes six buildings totalling roughly 20,000 sqm and is being offered with vacant possession or on a short‑term lease‑back; the company may also consider retaining about 2,000 sqm of office space if the site is redeveloped. Expressions of interest close in mid‑November.
What other commercial property sales or leasing items in the article should everyday investors note?
Other items of interest include a reported shortlist of bidders (including Mirvac) for the speculated $100 million sale of Doncaster’s Eastern Golf Club site, and a mortgagee auction for a 2,180 sqm Bulleen development allotment expected to fetch about $2 million. The article also notes a retail subdivision at 187–193 Elizabeth Street where Subway, Michel’s Patisserie and Wild Cards & Gifts took ground‑floor tenancies, with ground rents there quoted at roughly $1,900 per sqm.
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