JLL has announced the sale of the iconic David Jones, Bourke Street Mall, a premier retail asset in the heart of Melbourne's CBD. 

David Jones, Bourke Street Mall, one of Australia's most recognisable department stores, comprising approximately 25,000 sqm 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.

The sale of David Jones, Bourke Street Mall was exclusively brokered by Nick Willis and Sam Hatcher from JLL. The icon 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.

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 3 years and the largest single-asset retail transaction in Melbourne CBD in over 8 years.”

JLL's Head of Retail Investments, Sam Hatcher said "David Jones, Bourke St Mall’s consolidation of their David Jones Menswear Store in 2020 and more recently, their $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.”

Nick 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 5-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 and the recently acquired Cranbourne Park Shopping Centre into a new fund 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.

David Jones, Bourke Street Mall is a landmark CBD asset one of Australia’s most iconic retail destinations. The ability to acquire this property at ~$8,900 per square metre, with a yield of more than 7% and well below replacement cost represents a very attractive asset for us. We were also attracted by the recent major store refurbishment and the continued reinvigoration and gentrification of the Bourke Street Mall, including the new Melbourne Walk and 299 Bourke Street developments.” Commented Chris Lock, Founder and CEO, IP Generation.

Cranbourne Park Shopping Centre was similarly acquired at a highly attractive fully leased yield of over 8.5%, reflecting a significant discount to the co-owner’s carrying book value and a material outlier for recent metropolitan Melbourne sales. Cranbourne Park is a dominant sub-regional shopping centre located within the Casey-Cardinia Growth Corridor, a catchment which is expected to continue to grow at a rate materially above the Melbourne metro average. The asset occupies a significant 7.5 hectare site and includes eight mini-majors, 115 specialties, and five pad sites.

“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.

The SSIF is forecast to provide investors with a distribution yield of 9.0% per annum, majority tax deferred, and an IRR of 15.0% over the expected five-year hold period.

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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