Mixed-use developments are becoming more and more prevalent in large cities, driven by demand for housing near city centres, and increasingly, the need to add value to existing shopping centres with larger scale and more sophisticated schemes.
The upscaling trend has seen mixed-use projects move far beyond the traditional concept of the obligatory ground floor shops in a suburban unit block. Larger owners are now devising creative ways to engage with shoppers and improve amenity, with schemes involving uses such as residential, office, childcare, dry cleaning or even cinemas and five-star hotels.
We anticipate that ongoing population growth will maintain upward pressure on inner and middle ring suburban house prices, which is a major driver for increasing housing density in these areas.
Rezoning to mixed-use
In order to facilitate the growth, local councils often rezone land to mixed-use, from say, detached housing or industrial uses, a change that almost invariably gives rise to higher land values. The uplift is largely due to the profitability of medium density development and provides an impetus for owners to sell or redevelop the land.
Northcote Plaza Shopping Centre is next in line to experience one of these mixed-use transformations with plans recently lodged by Les Smith of LAS Group for a $500m redevelopment including residential apartments, office and retail.
Our team recently sold the K-mart and Coles to LAS Group for a combined $39m, and believe that these are just a few examples of how mixed-use schemes are not only coming of age, but are starting to respond to the changing consumer demands of our burgeoning inner city locations.
Major infrastructure, particularly train lines, has become another key driver for mixed-use schemes. A good example is Ed.Square by Frasers in Edmonson Park, where over 900 apartments are slated in a major development. The project also includes a Coles anchored shopping centre, cinema and 150 bed hotel and is set to benefit from the yet to be built Edmonson Park Train Station.
Opportunity to add value
Mixed-use schemes also provide existing owners of much larger properties the opportunity to add value.
These owners are recognising that certain mixed uses can complement the existing asset, such as adding residential units above an existing shopping centre to boost retail demand in the immediate catchment.
In the case of older style assets, such a redevelopment may require the complete demolition of the centre. Such is the case at Surry Hills Shopping Village, where Toga group now have planning approval for the demolition of the old centre to make way for a new mixed-use development.
The project comprises a Coles-anchored supermarket, strata offices and several medium rise apartment buildings with circa 150 units. The development will retain certain heritage elements, providing a tangible link to the past, and activate the retail component with ‘Melbournesque’ retail laneways.
Retail REITs are also becoming increasingly active in mixed-use development. For example, Mirvac’s ‘South Village’ in Kirrawee comprises a ground level neighbourhood centre anchored by Aldi and Coles, 27 specialty shops, a childcare centre, with residential units above.
The retail podium opened in November 2018 at the former Brickpit site and illustrates how mixed-use projects can create positive synergies, with more to follow when the residential component completes.
Mixed-use supermarket retail development is not just isolated to the east coast either with Primewest set to deliver a new Coles Supermarket within their development in Perth’s Shenton Park.
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