Woolies sells North Melbourne development site

Proposed Woolworths and apartment development in Canning Street North Melbourne. Photo: Supplied Proposed Woolworths and apartment development in Canning Street North Melbourne. Photo: Supplied
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Proposed Woolworths and apartment development in Canning Street North Melbourne. Photo: Supplied

Proposed Woolworths and apartment development in Canning Street North Melbourne. Photo: Supplied

Woolworths will bank a speculated price of close to $30 million from the sale of a prime inner-city development site it purchased during the 2010 commercial property downturn.

The North Melbourne block marketed as 111 Canning Street, but also with frontage to Macaulay Road and Vaughan Street, spreads across 8156 square metres, just two kilometres north-west of the city centre, near the Kensington suburb border.

Woolworths paid interests associated with Peter Stevens Motorcycles $17 million for the land in 2010, before controversially obtaining a permit to replace it with a mixed use village containing townhouses and two major apartment buildings, of 10 and 16 levels and containing a total of 304 flats.

The high rise proposal was unsuccessfully opposed by many locals as well as the City of Melbourne council which feared the scale and traffic impacts would negatively impact the area.

However, the Victorian Civil and Administrative Tribunal, in approving the project, described Woolworths land as “underutilised” and “well serviced”.

Woolworths proposed village also includes a 4400 square metre ground floor supermarket and bottle shop, which it would occupy on a lease running 20 years from a future occupancy start date.

A further 1400 square metres of retail space will be leased to specialty shops – the proposed complex, which will be visible to Citylink commuters around the Macaulay Road overpass – also offering a total of 611 car parks.

CBRE’s Mark Wizel, Craig O’Donnell and Julian White acted for Woolworths, which relaunched the sales campaign earlier this year. The agency managed an expression of interest campaign which closed in June.

The supermarket giant unsuccessfully attempted to sell the asset (and permit) following another campaign in early 2014.

A Woolworths spokeswoman previously told The Age the supermarket business had a preference to hold long-term leases over sites, instead of retaining them as property assets.

It is a formula followed by Woolworths rival Coles (and indeed other major companies, like McDonalds) to secure prime sites they want, primarily for their ground floor retail potential.

Coles, like Woolworths, have profited by on-selling Melbourne properties, often after adding value by obtaining permits to extend.

The trend has spread to the suburbs and regional areas too; in 2012, Coles paid $14 million for the Torquay Central Shopping Centre, 22 kilometres south-west of Geelong.

The Torquay Central complex, developed on a former primary school, spread across 1.4 hectares and offered Coles a shoo-in to the holiday hamlet market, which rival Woolworths had monopolised for decades.