Sydney’s Queen Victoria Building set for retail makeover
Sydney’s historic Queen Victoria Building will be reinvented as an international and luxury shopping destination as its owners, the listed Vicinity Centres and Singapore’s sovereign wealth fund, tap into rising Asian tourism and the shift to premium goods.
The Romanesque Revival building sitting on a city block across from Sydney Town Hall recently celebrated 120 years of trading and is already home to international retailers Coach, Furla, Longchamp and Salvatore Ferragamo.
“It’s an iconic building with an extraordinary population catchment with unrealised potential,” Vicinity chief executive Grant Kelley tells The Australian. “It’s such a beautiful asset that people, our team, love to work on it … it’s a real privilege to be associated with it.”
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Vicinity gained a half-interest in QVB, nearby Galeries and The Strand Arcade in a $1.1 billion swap with Singapore’s sovereign wealth fund GIC a year ago. In return, GIC now owns a half-stake in Vicinity’s Chatswood Chase shopping centre on Sydney’s lower north shore.
With retail under pressure from fast-growing online players such as Amazon, Kelley says the best-performing retail centres of the future would be either large destination centres or convenience retailing. The market in between the two segments is likely to face the most pressure.
“The area that you can’t be in is to have neither scale nor convenience — that’s where you will see a lot of the redundant space in retail,” he says
Vicinity CEO Grant Kelley at the QVB in Sydney. Picture: John Feder.
In centres that don’t meet changing trends, a proportion of the site will move to uses other than retailing over the longer term, Kelley says.
Landmark centres with an emphasis on food, leisure and entertainment work because “human beings love to congregate”.
“There are growth pathways but we have to get smarter about the way we think about the customer and how we go to market,” Kelley says.
In the US, the luxury market is very strong with the consumption of premium items rising as wage growth recovers, Kelley says.
In Australia, Kelley expects that trend to emerge and be fuelled by the strength of high-net-worth Asian tourism.
At Melbourne’s Chadstone shopping centre, owned jointly by Vicinity and billionaire John Gandel, 20% of sales are to tourists, he says.
“That’s why we are putting a hotel at Chadstone.”
While the retail sector is challenged, the landlord says its watch-list of retailers in arrears is falling as the sector continues to consolidate.
At QVB, which has 160 stores, Vicinity has struck deals with five new international and local fashion brands that are expected to be announced next month as it pursues its strategy.
There will also be a greater emphasis on food at QVB.
This article originally appeared on www.theaustralian.com.au/property.
