Private investor splashes $145m on Brisbane mall property

A wealthy family has forked out $145m for a high-profile property in Brisbane’s Queen St Mall to capitalise on growth in the luxury retail market.

ISPT has sold 170 Queen St in Brisbane.

The resurgence of city retail in the wake of the coronavirus crisis is defying a likely interest rate rise with a wealthy family splashing out $145m for a famed property on Brisbane’s Queen Street Mall.

The well-known property at 170 Queen St that houses big name retailers H&M and Uniqlo was sold by superannuation-backed fund manager ISPT, which has another $600m worth of city assets for sale.

The Brisbane transaction is yet another by a deep-pocketed private investor as a big institution exits and dseeks alternatives to traditional properties.

City commercial property was hit hard during the pandemic but the top end of the retail market continues to be a big drawcard, because the best properties are tightly held and perform in even the toughest parts of economic cycles while more marginal locations suffer.

It is only the second deal in the area over the past few years, which highlights the difficulty of buying into prime retail strips.

Big operators have noted the pick-up around the country, including in Sydney where Scentre Group has teamed with Cbus Property on a $1bn mixed-use development of the former David Jones department store at the corner of Castlereagh and Market streets. Earlier this year, GPT’s once-lagging Melbourne Central also said it would open 14 new stores as customers returned.

The Brisbane property, then known as Broadway on the Mall, was picked up by ISPT Core Fund in 2011 for $62.5m. It underwent a major redevelopment in 2016 with the introduction of the H&M and Uniqlo flagship stores.

In keeping with the separation of luxury spending from the broader economy, the gentrification of Queen Street Mall has accelerated. Louis Vuitton recently opened its new 1370 sqm flagship directly adjoining the property.

Fund manager Brett Williams said that the group had supported the repositioning of the Queen St building over the past decade. “The sale is consistent with the ISPT Core Fund’s portfolio curation strategy which will see the proceeds reinvested into the Fund’s existing development pipeline,” he said.

ISPT has large assets across Queensland including on the Queen Street Mall with 150 Elizabeth St, Wintergarden, 155 Queen St, Hilton Hotel and Uptown, which it owns with Vicinity Centres.

JLL’s retail investments team of Nick Willis and Sam Hatcher brokered the deal and noted that other luxury tenants were opening on the exclusive strip, including Tiffany & Co, Saint Laurent, and Paspaley.

Mr Willis said that opportunities to buy prime mall frontage holdings in Australia were rare and, with investment volumes across all retail sub-sectors down about 60 per cent year on year, there was a weight of well-capitalised investors looking to deploy funds into quality holdings.

The CBD retail sub-sector has been thinly traded, and only seven other deals worth more than $100m have been struck over the past five pandemic-interrupted years.

Brisbane is getting a boost from a surge of major infrastructure with government commitments of more than $15.4bn in significant projects related to the 2032 Olympics, including the Queens Wharf Precinct, Cross River Rail, and Brisbane Metro.

Mr Hatcher said that interstate investors were moving early. “We are continuing to see a growing trend of Sydney and Melbourne-based investors looking to the Queensland market given its relative value and strong growth prospects,” he said, noting strong migration.

“This thematic further underpins the strong investment fundamentals being a lack of retail floorspace supply and a growing population imbalance for the retail sector,” he said.

Mr Willis said the trend was global with deal volumes down in London, New York and Tokyo. But wealthy individuals are making the running. “Private investors continue to lead transactions in all markets, where in London they have experienced an increase in Asian and Middle Eastern investors taking advantage of the relative value,” he said.

Total retail spending remains elevated, up 6.4 per cent year on year in August, according to the ABS spending data. Traditional CBD retail categories of clothing and apparel, and cafes and food recorded the strongest month-on-month growth in August, up 1.3 per cent and 0.7 per cent respectively.

ISPT is riding the wave of interest with more sales to come including Eastgate Bondi Junction and the Melbourne GPO and The Strand, which it has on the block.