Former Darrell Lea store on George Street expected to sell for more than $30 million

Owner Victor Comino, a Sydney-based retail property investor, bought the property, at 396 George Street, for $26 million in February 2015 from the Lea family who owned Darrell Lea chocolates.

Mr Comino recently acquired the Soul Pattinson Chemist at Pitt Street Mall for $100 million in March 2018 and also owns the flagship Apple store across the road and the Louis Vuitton store diagonally opposite.

The space was Darrell Lea’s oldest shop before the company was sold.
Photo: Dallas Kilponen

The property is currently being used as Telstra’s “Discovery Store”, which is interconnected with the neighbouring Sydney headquarters of Telstra, at 400 George Street.

Telstra spent about $15 million on the refurbishment of 396 George Street, including the restoration of the heritage façade, in 2014.

Knight Frank’s Dominic Ong, Andy Hu and Alex Alamsyah, have the listing, with JLL’s James Aroney and Steven Tsang.

Mr Hu said the property had already received inquiries before the official listing and expected interest to come from local syndicates and funds, while potential offshore buyers would include high-net-worth individuals and family offices.

“Buyers from Hong Kong, they understand retail very, very well and this is sort of the trophy asset that these families would like to acquire.”

Mr Hu pointed out that while the chance of Telstra moving out was “very slim”, given the multimillion-dollar refurbishment, it was possible for future occupiers or tenants to use it as a flagship store similar to the nearby Louis Vuitton store.

The property is leased to Telstra until February 2020 with a net passing income of about $1.21 million, with a five-year option.

Mr Ong said the corner property had “potential rental upside given the repositioning of George Street pedestrian mall”.

“396 George Street is situated in what is considered Sydney’s equivalent to New York’s Fifth Avenue, Singapore’s Orchard Road, Hong Kong’s Causeway Bay, London’s Regent Street, and Paris’ Champs Elysees,” he said.

Mr Aroney said the revitalisation along George Street was key attraction for buyers.

“The precinct is also set to benefit from the current significant investment into infrastructure improvements, including the Sydney Metro light rail, which is directly in front of the building and will further improve transport connectivity between the core, midtown and southern precincts of Sydney’s CBD.”

While that section of George Street between Market and King streets reopened in December 2017, many retailers have complained about the impact the CBD light rail construction has had on their businesses.

One watch retailer, closer to Wynyard Station, has begun legal action against the NSW government for losses it claims to have suffered from the construction work.

Originally built in 1863 for wholesale and furnishing ironmongers Ashdown & Co, the corner building was burnt down in 1866. It was then rebuilt according to the same plans.

Darrell Lea founder Harry Lea then took over the building in the 1920s after starting his business selling sweets from a cart in Manly. He named the company after his child Darrell Bernard Lea.

Darrell Lea moved out in 2012 after the business collapsed and was sold to Queensland’s Tony and Christina Quinn, who founded pet food manufacturers VIP Petfoods.