Retail landlord Vicinity Centres is set to grow Australia's largest shopping centre with the announcement of a $685 million expansion.
Melbourne’s Chadstone shopping centre, co-owned by billionaire John Gandel and ASX-listed Vicinity Centres, will now undergo a major revamp after plans were announced at the company's annual general meeting in November.
Vicinity plans to expand the centre by a total of 43,000sq m—with 4,300sq m dedicated to traditional retail and 1,450sq m for new cafes and restaurants—by re-purposing existing space.
Detailed plans include $97 million worth of upgrades to two existing car parks with 850 new parking spaces at David Jones and 550 at Coles, a $130 million nine-storey commercial office and a $340 million upgraded fresh food precinct.
The flagship centre is one of the landlord’s best trading malls, underpinning the group’s profits and making up about 21 per cent of the value of Vicinity’s property portfolio.
The centre generates $2 billion in annual sales, ranking it as the world's fourth most profitable centre, welcoming upwards of 24 million people annually.
The centre has been doubling sales every decade for the past 30 years in its evolution from a popular suburban shopping complex largely to an international fashion hub and tourist destination with a hotel, convention centre, cinemas and high-end restaurants.
The ambitious overhaul aligns with Melbourne's growth trajectory, poised to overtake Sydney as Australia’s most populous city in 2026, with an expanded Chadstone better positioned to service the growing population.
“We’re excited to be able to share with our neighbours and the broader community our vision and proposed plans for the future of Chadstone,” Vicinity chief development officer Carolyn Viney said.
“Our plans will address demand from commercial tenants wanting to be based at Chadstone and continue to deliver the experiences our customers and retailers have come to expect from The Fashion Capital.”
In a bid to turn the tide, Vicinity's latest scheme is characterised by a shift towards experiential transactions, such as dining and entertainment, and the offer of services, such as childcare and health and wellness.
Earlier this year, Vicinity Centres devalued its $15.8 billion portfolio by 0.2 per cent, a decline of $37 million over the six month period.
The nation's second largest mall landlord attributed the write-down to its regional, sub-regional and neighbourhood malls as well as continued softening in capitalisation rates.
Development applications have been submitted to the City of Stonnington in Melbourne’s east with works scheduled for 2021 and expected to take four years.
Vicinity will run a 10-week community consultation process for feedback on the changes from December to February.