Chadstone shopping mall expands, again
Australia’s largest shopping mall, Chadstone, is expanding again, with a $485 million redevelopment underway that will add an entirely new office building to the retail destination in south-east suburban Melbourne.
The 20,000 square-metre office block, known as One Middle Road, will be finished by mid-2024.
A revitalised food precinct, dubbed The Market Pavilion, is part of the latest reworking of Chadstone, which is jointly owned by ASX-listed Vicinity Centres and property billionaire John Gandel. Already in progress is the addition of another 11,000 bays to the mall’s carparks.
The One Middle Road office tower will incorporate a sky garden, business lounge and end of trip facilities. It is more than 50 per cent pre-leased already.
“We know there is significant appetite for workplace solutions outside of the traditional CBD, and this significant investment in the centre’s development recognises the important role Chadstone plays at the heart of an emerging 20-minute city in Melbourne’s south-east,” centre manager Daniel Boyle said.
Vicinity has been tapping into that sentiment elsewhere, with substantial office towers slated at other malls in its portfolio as part of a $2.9 billion development pipeline to diversify its retail holdings with mixed use real estate, including apartments.
Late last year, Vicinity won approval to build a 14,000 square metre office tower at its Bayside centre also in Melbourne’s south-east while securing Officeworks’ corporate headquarters for another office building being refurbished at Chadstone shopping centre.
Office space is also being developed or proposed at Bankstown Central in Sydney, at Box Hill in Melbourne, and at Buranda Village in Brisbane.
While these projects generate additional value from Vicinity’s land holdings, they also drive more foot traffic into the malls. Workers at the emerging One Middle Road at Chadstone can take advantage of on-site childcare and wellness facilities and other services in the retail centre itself.
Retailers at Chadstone and other upmarket destinations such as Emporium Melbourne have been buoyed a boom in luxury shopping, according to Vicinity’s chief executive Grant Kelley.
Demand for luxury coupled with the need for more space so that retailers can service online orders have led to a resurgence of large, destination shopping centres this year, Mr Kelley told The Australian Financial Review Property Summit last month.
Luxury sales across Vicinity’s portfolio were up 30 per cent on an annual basis as part of an “extraordinarily strong” broad-based retail sales recovery, he said.
“Retailers are seeing sales increasing, and while that continues, for landlords the value proposition around a shopping centre is a strong story,” Mr Kelley told the Summit.
