Zara bolsters Bourke Street Mall

RENOWNED Spanish fasion retailer Zara is to open a store in Melbourne's Bourke Street Mall. It will take over the store now leased to Supre, next door to David Jones.

By InvestSMART · 10 Nov 2010

By InvestSMART ·
10 Nov 2010

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RENOWNED Spanish fasion retailer Zara is to open a store in Melbourne's Bourke Street Mall. It will take over the store now leased to Supre, next door to David Jones.

The Spanish company, which has annual revenue of ?6.8 billion and more than 70 stores around the world, has a signed a new lease over the entire building, excluding the basement. It will have a 19-metre frontage to the mall.

Zara has taken a new lease over the ground, level 1, level 2, level 3 and level 4, with the rent believed to be worth more than $3 million per annum.

Supre leased the space in 2007, but appointed CBRichard Ellis as exclusive agents to market the property, either as a sub-lease or to assign the existing lease.

The current Supre lease expires on April 30, 2016.

Max Cookes, CBRE's senior retail services negotiator, negotiated the deal, but declined to comment when contacted by BusinessDay.

The Bourke Street Mall, along with Westfield's new Sydney shopping centre, will be the site of Zara's first stores in Australia. Zara has also been linked to Chadstone shopping centre.

Zara's presence will solidify the Bourke Street Mall's status as a powerhouse retail strip, and provide big competition to existing players.

David Jones and Myer are the two main department stores in the mall.

Next to Myer is Colonial first State's new retail development project that will span from the mall to Lonsdale Street. Melbourne's former GPO, on the corner of Bourke and Elizabeth Streets, also sells quality fashion, luxury goods and dining.

Other nearby flagship stores include adidas, Sportsgirl, General Plant, Jetty Surf and The Body Shop.

Zara, which sells men, women's and children's fashion, has taken the world's fashion market by storm since opening its first outlet in 1975. It is the flagship chain store of Inditex Group owned by Spanish company tycoon Amancio Ortega, who also owns brands such as Massimo Dutti, Pull and Bear, Oysho, Uterque, Stradivarius and Bershka.

The group is headquartered in A Coru?a, Galicia, Spain. It is claimed that Zara needs just two weeks to develop a new product and get it to stores, compared with a six-month industry average, and launches around 10,000 new designs each year.

Zara has resisted the industry-wide trend towards transferring fast fashion production to low-cost countries. It has a policy of zero advertising, preferring to invest a percentage of revenues in opening new stores instead.

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Frequently Asked Questions about this Article…

What is happening with Zara in Melbourne’s Bourke Street Mall?

Zara is opening a store in Melbourne’s Bourke Street Mall by taking over the space currently leased to Supre. The Spanish retailer has signed a new lease over the entire building (excluding the basement) and will occupy the ground floor plus levels 1–4, with a 19‑metre frontage to the mall.

How large is the Zara lease and what will the rent cost?

Zara’s new lease covers the whole building above the basement (ground to level 4) and features a prominent 19‑metre frontage. The rent is believed to be worth more than $3 million per annum, according to the article.

When does the current Supre lease expire and who marketed the space?

Supre originally leased the space in 2007. Its current lease expires on April 30, 2016. Supre appointed CB Richard Ellis (CBRE) as exclusive agents to market the property either as a sub‑lease or to assign the existing lease.

Is the Bourke Street Mall Zara one of the brand’s first Australian stores?

Yes. The article states that Zara’s Bourke Street Mall location, together with Westfield’s new Sydney shopping centre, will be the site of Zara’s first stores in Australia. Zara has also been linked to Chadstone shopping centre.

What does Zara’s arrival mean for investors in Melbourne retail property?

Zara’s presence is expected to solidify Bourke Street Mall’s status as a powerhouse retail strip and to provide significant competition to existing players. For retail property investors, that can mean increased foot traffic and stronger demand for premium retail space in the precinct.

What competitive advantages does Zara bring as a fast fashion retailer?

According to the article, Zara is part of Inditex and has annual revenue of about €6.8 billion and more than 70 stores worldwide. It is known for rapid product turnaround—claiming it can develop a new product and get it to stores in around two weeks versus a six‑month industry average—launching roughly 10,000 new designs each year. Zara also follows a zero‑advertising policy and reinvests in opening new stores.

Who negotiated the Bourke Street Mall deal for Zara?

Max Cookes, CBRE’s senior retail services negotiator, negotiated the deal for the property. The article notes he declined to comment when contacted by BusinessDay.

What other nearby retail developments and flagship stores should investors be aware of?

The article highlights other key players in and around Bourke Street Mall, including department stores David Jones and Myer, Colonial First State’s new retail development next to Myer spanning to Lonsdale Street, Melbourne’s former GPO (corner of Bourke and Elizabeth Streets), and nearby flagship stores such as adidas, Sportsgirl, General Pants, Jetty Surf and The Body Shop. These tenants and developments shape the competitive retail environment for investors.