David Jones has sold its menswear Bourke St Mall building to Melbourne-based property fund manager Newmark Capital for $121 million.
The 2,247sqm building at 299 Bourke St has been sold on a short-term leaseback to the retailer and the deal was negotiated by CBRE's head of retail capital markets Simon Rooney.
According to CBRE, the Bourke Street location generated 140 enquiries and fielded 15 bids.
Rooney said that the chance to transact on such a well-known piece of real estate was rare.
"The highly unique offering of 299 Bourke Street attracted significant levels of international and domestic interest and enquiry, resulting in genuine bidder depth, reflecting one of the most competitive retail campaigns for an asset of this size and nature.
"Strategic investment opportunities such as 299 Bourke Street, located at the heart of Melbourne’s super prime pedestrian mall provides enormous scope and opportunity for Newmark to reposition the asset when David Jones vacate and relocate.
"Seldom do we get the opportunity to transact these types of investment opportunities," he said.
According to CBRE, Newmark Capital had been attracted to the property due to the fact that it will be able to acquire a vacant building after the leaseback to David Jones, after which it is set to transform the building into a mixed-used asset.
Newmark Capital co-founder Chris Langford told reporters at The Age that the site will be transformed into an office space.
"We're looking at office and retail.
"It's a great location and it's a really nice space. It will be like a loft-style office," he said.
David Jones CEO Ian Moir said that the divestment of the menswear building will allow the retailer the opportunity to redevelop its flagship Bourke Street location across the road.
"The divestment of 299 Bourke Street Mall will allow us to focus on the optimisation of our larger 310 Bourke Street store and deliver a more cohesive and elevated single store experience in Melbourne’s CBD while simultaneously paying down debt as part of our ongoing debt reduction strategy.
"The redeveloped 310 Bourke Street, will be specially curated for our Melbourne customers with an emphasis on premium luxury and lifestyle brands across each of our categories," he said.
In May, David Jones owner, Woolworths Holdings appointing investment bank UBS to review both the David Jones and Country Road businesses, in a bid to reduce a $464 million debt burden, using the sale of iconic retail locations to help diminish the debt.