No apartments for Chadstone…yet

Angus McNaughton oversees the redevelopment at Melbourne’s Chadstone centre. Picture: Aaron Francis

Retail landlord Vicinity Centres has ruled out building apartments at Melbourne’s Chadstone Shopping Centre in the near future, but preparations will begin for a new hotel in the next two years as the group completes its $660 million redevelopment of the landmark property. 

Vicinity Centres chief executive Angus McNaughton says the company is “very cautious about apartments”, saying: “I think if we had an apartment tower here … with maybe 500 different unit owners, there’s a level of complexity with a centre that’s developing and growing that we don’t need at the moment.”

Vicinity Centres shelved plans for a hotel tower in 2014, but the plans have been reinstated and McNaughton says the company expects to start work on the ­accommodation by 2018.

“The hotels around here in the Monash-Chadstone area have very strong occupancy and we would offer the best amenity anywhere,” he says.

Vicinity Centres has completed work on a 17,000sqm office tower, with McNaughton noting that only one floor is still to be leased.

The first phase of the Chadstone centre redevelopment is to be unveiled next month with 34,000sq m of retail and office space added, making it Australia’s largest shopping centre.

McNaughton says he expects to see an initial yield of more than 6%, with a return of more than 10%, from the first phase of development.

The listed retail landlord owns Chadstone Shopping Centre jointly with the Gandel Group — owned by Melbourne-based investor John Gandel. McNaughton says there are no plans to change the ownership structure of the shopping centre.

One hundred new retailers are expected to open at Chadstone by the time development is completed, under a gridshell roof made up of more than 2500 individually crafted glass panes.

Luxury designers Valentino and Celine will move in to the new development, while there will be two new dining precincts and Australia’s first Legoland Discovery Centre.

McNaughton says he is confident about the future of shopping centres in Australia.

This article originally appeared on www.theaustralian.com.au/property.