In one of the largest redevelopments in Moonee Ponds, a suburb made famous by Dame Edna Everage, privately owned Melbourne property developer Caydon has acquired the former local market site and will create a $650 million apartment, retail and office project.
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It was recently offered for sale by the joint owners, Leighton Properties and Qualitas.
The project comes as developers turn turning old Melbourne and Sydney sites into residential zones to cater for the demand for inner city living.
Lend Lease has redeveloped the former channel Nine studio in Bendigo Street, Richmond, in inner Melbourne for new apartments.
GPT Group is also looking at building apartments on top of its Melbourne Central shopping centre in the CBD, while there are similar preliminary plans lodged by David Jones to develop its Market Street store.
The owners, the South African Woolworths, said it is still reviewing the four stores it owns - two in Melbourne and two in Sydney - and whether to sell and lease them back. They are valued at about $630 million.
Located at 40 Hall Street and 34-36 Margaret Street, the Moonee Ponds site has a concept plan for a multi-staged development comprising about 1200 apartments.
CBRE negotiated the sale of the 13,400-square-metre site in conjunction with JLL, which is currently leased by Carepark. CBRE director Mark Wizel said the sale is a clear demonstration of the confidence that local developers have in the residential apartment market within 10 kilometres of the Melbourne CBD.
Given the scale of the site, and the proposed concept plan, Mr Wizel said buyer interest had centred on the potential to develop the asset as a new mini suburb.
Caydon principal Joe Russo said the company intended to revitalise the site and create a destination hub, complete with retail and office space.
"The acquisition fits with Caydon's strategy to develop inner city neighbourhoods where people can live, work and socialise close to public transport, retail amenity and parklands," Mr Russo said. "The site benefits from its proximity to a thriving eclectic retail strip, being Puckle Street, in addition to two major shopping centres."
Leighton Properties and Qualitas acquired the 1.34 hectare site from Reading International in October 2013. The land is zoned Commercial 1, which allows for mixed use. A development plan overlay is presently with the Victorian government for approval.
Mr Wizel said the sale had been finalised amid a significant shift in the Melbourne housing market, which was underpinning the current strength in the suburban residential development site market.
"We are seeing a growing shift towards apartment living in the face of rising house prices, which is providing opportunities for the local property and building industry," Mr Wizel said. "Whilst Asian-led consortiums continue to dominate the skylines of the Melbourne CBD, it has been a handful of strong local developers such as Caydon that have led the way in the suburbs to satisfy the current buyer demand."
Caydon has been one of the most active non CBD residential developers post the GFC with major projects in Prahran, Hawthorn, St Kilda and Brunswick.
"We have found that there is a deep owner occupier and investor market for product that is well designed, functional and surrounded by first class retail, lifestyle and transport amenity. Only Flemington is a great example of this, having generated a groundswell of interest from local owner occupiers and investors."
Caydon is expected to announce plans for the Moonee Ponds site in the coming weeks.
