Myer eyes smaller lease in Melbourne
Su-Lin Tan and Larry Schlesinger
Beleaguered department store chain Myer is looking to rationalise its office space further as it eyes a move from its purpose-built headquarters in Docklands to another tower under development nearby.
It is understood the retailer is in discussions to close a lease of about 10,000 square metres over several floors at developer and investor Poly Australia’s new 24-storey office tower at 1000 La Trobe Street in Docklands.
The Chinese-backed group has been hunting for an anchor tenant for the 31,000 sq m A-grade office tower, since deciding to go ahead with a commercial development at the site. It had previously planned a 600-unit residential tower for the land but the deteriorating apartment market prompted a switch to offices, circling back to the site’s original permit issued in 2013.
Poly bought the site from the Liberman family-backed Digital Harbour for $32 million.
Poly declined to comment on the deal but said it was “in talks with a number of potential tenants and no contracts have been signed at this point in time”.
Construction is likely to kick off at the tower in June.
Myer made no secret of its plans to downsize from its current premises at 800 Collins Street, as it looks for savings amid a full-year net loss of $486 million in the last financial year.
Just days ago, the company cut another 50 jobs in marketing and merchandising roles and store administration in an attempt to reduce labour costs and pressure on margins as sales continue to slide. That cut followed the loss of 30 executive and senior management roles last August.
The struggling retailer has already surrendered four floors at 800 Collins Street to Latitude Financial Services in its effort to reduce its occupancy at the 10-level 28,620 sq m tower, now owned by Manulife Australian Office Properties Trust.
Poly’s deal with Myer flags the shake-up in the property industry at present, with retail businesses facing trading headwinds and struggling to keep up with expensive rents and leases and residential developers abandoning plans for apartment developments in favour of commercial projects.
Poly has been following the commercial-switch strategy for its projects particularly the ones in Melbourne. Aside from 1000 La Trobe Street, the group will also convert the residential project at 150-152 Bridge Road and 1-3 Allowah Terrace in Richmond into a commercial development.
The flexible approach ensures the group’s longevity; it is now looking to boost its Australian business by offering co-ownership stakes in its $1 billion office project portfolio in Sydney and Melbourne.
As it looks to bed down the deal with Myer, it commences demolition work at its flagship $500 million office tower in Sydney near Circular Quay.
