Unlocking development potential above shopping centres
Recent decisions by large organisations, Federation Centres and GPT Group, reflect the suggestion that plans to develop air rights and extend retail shopping centres to include residential developments and hotels are becoming increasingly popular. Presenting as a viable opportunity to combine entertainment facilities, food courts, hotels and residential apartments; the expansions appeals to visitors and staff whilst ensuring facilities are used as much as possible.
One of the first malls to integrate residential living was the Swissotel in Sydney, located with Westfields Central Plaza (SMH). Today, World Square on George Street, Sydney, is said to be one of the busiest sites in Australia as people work, live and play in the same complex (SMH).
The Australian recently reported that Federation Centres is following Scentre Group and Stockland with its plans to jointly develop with residential developers. The decision for residential developments atop or adjacent to shopping centres come as a result of the 107% rise in net profit for the 2014 financial year (The Australian).
Steven Sewell, Chief Executive of Federation Centres, spoke with The Australian stating “It really extends back to the fact that we own a lot of properties that are very old and mature in their markets. So where markets have developed and densified, particularly around us, we see great opportunities”.
GPT Group announced they too are planning to develop air rights above their malls, beginning with Melbourne Central as reported in the Sydney Morning Herald. The air rights are thought to include student accommodation and potentially a hotel (SMH). Carmel Hourigan of GPT Group was recently quoted “Mixed use opportunities are being investigated as part of the master planning process across the portfolio to transition retail assets from pure shopping centres into major activity or town centres” (SMH).
Furthermore a preliminary development application has been lodged for development on the air rights above David Jones Market Street site in Sydney (SMH,) suggesting a potential residential complex or hotel may be in the pipeline.
Preston Rowe Paterson have extensive experience providing advice and undertaking valuations of shopping centres for investments; past projects include services for Harbourside Darling Harbour, retail outlets at King Street Wharf, heritage retail shops on George St and The Rocks Square. In addition, we have experience in valuing developable air rights above shopping centres.
To discuss our services further please contact Greg Preston, contact details can be found here.