South African retailer Woolworths is likely to sell the development rights to David Jones’s flagship Market Street building in Sydney, with a larger amalgamation play with neighbouring sites to bring the highest price.
David Jones owns four retail properties in the heart of Sydney and Melbourne that were valued at about $612 million in 2012. This excluded any development upside and the Sydney properties are well placed to cash in on the apartment boom.
David Jones in March appointed Colliers International to seek expressions of interest in its Market and Elizabeth street sites in Sydney, but that was put on hold due to the $2.15 billion takeover by the South African retailer.
Woolworths says it now “intends to review alternatives with respect to the owned (freehold) property portfolio of David Jones once further information on any property-related matters is made available to Woolworths”.
The greatest value lies in pulling together the sites around the Market Street building as they could accommodate a $1bn-plus development. Adjoining owner City Tattersalls Club has chosen Mirvac Group to develop a 48-storey apartment block.
But the tower’s views may be compromised if David Jones secures permission for a tower above Market Street and sells the rights to another developer. Mirvac may protect its position by striking a deal with the new owners of the Market Street site.