Kmart leading trend towards less is more
The Royce is to get another 67 suites.
KMART's strategic decision two years ago to reduce its product range substantially is resulting in the retailer downsizing from ''last-generation'' outlets when bigger was better in the department-store sector.
The Wesfarmers-controlled business - considered an anchor tenant by retail landlords - now has a preference for stores between 5000 and 6000 square metres, a drop from the approximately 8000 square metres it says it sought in the past.
In Victoria recently the company has reduced its occupancy at the huge Southland complex, in the south-east, while at Centro Keilor, in Keilor Downs,
Fitzroy's The Fabric Store sold at auction for $3.8 million. Photo: Greg McKenzie
north-west of town, Kmart will operate from just 6000 square metres, recently relinquishing 1500 square metres.
The downsizing trend is being adopted by rival Target, Kmart's Wesfarmers-controlled sister, which last September unveiled the first of its ''small format stores'' in South Yarra's ritzy Chapel Street.
Another department chain, Dimmeys, recently sold its owner-occupied superstores in Richmond and Footscray to fund the opening of smaller stores within metropolitan and regional shopping centres.
And, five months ago, Myer also announced it would shrink or close stores, blaming the two-speed economy and online shopping for that decision.
Kmart, under the direction of former McDonald's Australia head Guy Russo since 2008, says trading figures have improved since it adopted in 2010 a strategy to reduce store sizes.
It recently slashed its produced range from 100,000 lines to about 40,000, and narrowed its focus to value products. Its research showed clients spent an average 20 minutes in store shopping.
Deakin University retail industry fellow Steve
Ogden-Barnes describes the downsizing trend as the ''less is more … profitable'' philosophy. He said value and simplicity, not volume and complexity, was the new face of big-box retailing, as the sector faced increased competition from global online businesses.
CBRE agent Justin Dowers says that, ironically, tenants will pay up to $1000 a square metre to lease retail space in a major shopping centre, compared with the between $150 and $200 a square metre Kmart generally pays.
In Keilor Downs, Mr Dowers said redundant Kmart space had been leased at premium rents to a car park and a gym. In Shepparton, however, a shopping centre recently fell into the hands of receivers after Kmart confirmed it wanted to downsize.
THE owners of St Kilda Road's Royce Hotel have had their major expansion plans approved by Melbourne City Council.
A four-level office building at 387-389 St Kilda Road, and next door to the historic hotel, is set to make way for an
eight-level inn, built atop two basement levels, one of which will be decked out with a spa, gym and pool. The new structure will add 67 suites to the about 100 rooms the Royce operates at present.
The Age reported that the hotel had bought the St Kilda Road office building in 2010. The office separates the Royce from a prestigious apartment project at 401 St Kilda Road, developed by Morry Schwartz on the site of the rundown Kings Cross Plaza, a shopping mall and office complex developed in the 1980s.
The heritage-listed building occupied by the Royce Hotel was designed in the 1920s as Melbourne's first prestige car showroom. At the border of South Yarra, the Royce abuts Melbourne Grammar School. Suites within the new hotel will enjoy unobstructed views to the CBD.
Elsewhere in St Kilda Road, Asian Pacific Group recently built an 18-level, 209-suite hotel, The Blackman, at the north-west corner of Arthur Street.
VICTORIA University, four years after announcing the closure of its Sunbury campus, has confirmed it is likely to sell the property soon.
A university spokeswoman told BusinessDay the decision to sell had to be made in consultation with other parties including the state government. But it confirmed documents tabled in Parliament recently revealing the university will seek prospective buyers for the site in The Avenue.
Victoria University moved to the area in 1992, but its analysis four years ago showed there was little possibility the Sunbury campus, or another in Melton, would reach a viable size by 2031.
It is speculated the Sunbury campus will sell to another education facility or to a community service provider. Any new owner may propose a mixed-use project, which may furnish profits from residential or student accommodation, or a commercial component.
Last November, Victoria University reaped $28.2 million from the sale of a nine-level, 574-bay car park at 300 Flinders Street in the city. It paid $15.9 million for 300 Flinders Street in May 1993. The car park investment sold to Leigh Seymour, daughter of Queensland property magnate Kevin Seymour.
Top o' Bourke
A CHINA-BASED investor with local representation has paid a speculated $5 million for an 1880s office building with development potential at the top of Bourke Street.
The three-level, 500-square-metre building at 73-77 Bourke Street is configured with three separate shops at ground level. It is expected that the shops and a vacant office in the building will be renovated and then offered to the market for lease.
On a 260-square-metre block the site has redevelopment potential. It is opposite the Grossi Florentino restaurant and near the Windsor Hotel and the former Metro nightclub.
CBRE selling agents Mark Wizel and Josh Rutman did not return calls when contacted by Capital Gain.
Meanwhile, a kilometre north of the CBD at 184-186 Brunswick Street, Fitzroy, a historic three-level building known as The Fabric Store sold at auction on Thursday for $3.8 million.
Five bidders competed for the Business 1-zoned property, which has the potential to be redeveloped into a higher-density mixed-use project with apartments. Colliers International's Jeremy Gruzewski and Ted Dwyer marketed The Fabric Store with Nelson Alexander's Arch Staver.
No room for inn
FOOTSCRAY's historic Belgravia Hotel, along with neighbouring buildings occupied by a pool hall and tattoo parlour, will be demolished to make way for an apartment tower.
Maribyrnong City Council has approved a 12-level, 105-unit tower for the adjoining sites at 16-20 Buckley Street, and 236-238 Nicholson Street. Despite a 2011 parking review suggesting the proposed new complex would generate demand for 137 car spaces, just 70 bays have been permitted.
Developed in 1875, the Belgravia Hotel was reportedly where the Footscray Cricket Club formed more than a century ago.
Elsewhere in the area, the state government's development arm, Places Victoria, is seeking to redevelop a 1.3-hectare block on McNab Avenue, near the Belgravia Hotel, into a $350 million apartment-based village.
Major apartment towers are also earmarked for about 15 hectares of Footscray land known as the Joseph Road precinct and abutting the Maribyrnong River.