JLL has announced the sale of the iconic David Jones, Bourke Street Mall, a premier retail asset in the heart of Melbourne’s CBD. The asset has been acquired by Melbourne-based fund manager IP Generation, one of Australia’s most active buyers of retail assets, for $223.5 million.
David Jones, Bourke St Mall, a Melbourne retail icon, holds the title of the country’s longest-continuously operating retail establishment. This historically significant property, originally built in 1911 for Buckley & Nunn’s department store, was acquired by David Jones in 1982. As Australia’s oldest retailer, David Jones has maintained the building’s legacy, preserving its architectural demeanour while adapting to modern retail needs.
The sale of David Jones, Bourke Street Mall was exclusively brokered by Nick Willis and Sam Hatcher from JLL. The asset comprises approximately 25,000m2 of gross lettable area across seven levels. The property is fully leased to David Jones on a secure triple net lease, with 18 years remaining.
Nick Willis, Senior Director at JLL said, “Australian icons such as David Jones, Bourke Street Mall are rarely traded. The opportunity presented a unique investment proposition of irreplaceability, income security and long-term value. The sale marks the largest Australian CBD retail transaction in over three years and the largest single-asset retail transaction in Melbourne CBD in over eight years.”
JLL’s Head of Retail Investments, Sam Hatcher said, “David Jones, Bourke St Mall’s consolidation of its David Jones Menswear Store in 2020 and more recently, its $38 million refurbishment of the property further underpinned the tenant’s long-term commitment to this location. The significant refurbishment has transformed the top three retail floors, a new ground-level beauty department and introduced luxury retailers such as Louis Vuitton set to open in 2025.”
Willis went on to say, “The transaction marks a significant milestone in the resurgence of CBD retail investments. Retail CBD transactions in 2024 were down 87% from the 10-year average. However, the CBD retail sector has shown resilience and recovery over recent years. Melbourne’s CBD retail vacancy rates have now reached a five-year low of approximately 5%, now under the 10-year average and significantly below the national CBD retail average of 12%.”
JLL anticipates that the development constraints and imbalance between supply and demand will further reduce vacancy and drive strong forecast rental growth in the sector.
IP Generation Founder and CEO Chris Lock commented, “David Jones, Bourke St Mall is one of the most iconic properties, not only in Melbourne but the whole Australian market. The ability to acquire 100% interest in such trophy assets rarely comes available. The gentrification that is occurring around Bourke Street, with the new Melbourne Walk development is further strengthening the precinct, which coincides with David Jones’s major store refurbishment and new luxury tenants opening including Aesop, Louis Vuitton and Gucci.”
IPG has combined David Jones, Bourke St Mall (100% interest) and the recently acquired Cranbourne Park Shopping Centre (50% interest) into its new Special Situations Income Fund (SSIF) with total assets of approximately $350 million. This blended portfolio offers investors a mix of secure long-term income and growth potential from the two complementary Melbourne retail assets. The SSIF is forecast to provide investors with a distribution yield of 9% per annum, majority tax deferred, and an IRR of 15% over the expected five-year hold period.
“The acquisition of Cranbourne Park Shopping Centre marks our second joint venture with Vicinity Centres. IPG and Vicinity are well aligned in our vision for Cranbourne Park and we are excited to continue our strong partnership in delivering strong returns for our respective investors,” said Greg Miles, Director, IP Generation.
David Jones Bourke Street and Cranbourne Park Shopping Centre are the most recent additions to IP Generation’s growing portfolio, which now comprises 17 major commercial real estate assets with a combined value of over $2.2 billion.
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