Orchard Shopping Centre, Chatswood
Orchard Shopping Centre, Chatswood
Our client operates a trans-national enterprise from Hong Kong and makes infrequent and brief visits to Sydney. He therefore requires a comprehensive real estate service to protect and maintain his retail property interests in Australia.
The Orchard Centre comprises a retail arcade of twenty two shops with a licensed tavern and offices on the upper level. The property is located in what used to be a prime location in Victoria Mall, adjacent to Chatswood Station. The changes to the retail hierarchy in Chatswood following the development of Chatswood Chase and Westfield Chatswood have resulted in tenant attrition and high vacancy rates in Victoria Mall.
Significant town planning changes including the demolition of the Interchange and the redevelopment of that site have also caused strategic difficulties for our client and additional resources are needed to protect its interests.
To hold the line in terms of net rental income in the face of structural changes in the market place. This involves re-positioning of the centre, critical negotiations with the major tenant, cost control and advisory and advocacy roles in respect of town planning changes.
The change to the retail hierarchy meant that a new direction was needed for the centre. A conscious decision was taken to substitute service retail providers for the impulse traders who seem attracted to the other centres. This meant changing the terms of tenancy to accommodate these businesses which traditionally have a lower rental threshold but also to build in mechanisms to secure increases through market reviews and subsequent lease renewals. Hence clothing repairs, food, convenience store, printing and gifts, Asian specialty shops were targeted in our leasing and are now trading successfully.
The Tavern is the major tenant in terms of drawing power and rental, including a significant percentage rental contribution. Two additional hotels had opened within the trade area and adversely impacted the Orchard Tavern’s revenue. Long term negotiations involving alternate development options and a renovation of the Tavern have been directed at resolving these problems.
The retail offer in the centre has been successfully repositioned. There are no vacancies and the rental stream has been re-established. This is a particularly rare feat in the western end of Victoria Mall where adjacent shops have been vacant for more than two years. Operating costs have been reduced through careful management and objection to statutory valuations.
We have concluded negotiations to renew the tavern lease for 20 years incorporating a $4.5 million refurbishment, an extension of the premises into previously unused spaces, an increase in base rental and obligations to maintain 30 poker machines on site to protect the percentage rental. This new lease includes resolution of the disputed ownership of poker machine entitlements whereby 15 entitlements pass to our client with a present value of $2million.
We have campaigned against the Transport Interchange Development Corporation’s plan to alter the pedestrian traffic movement from the new station to the Mall. This has resulted in the relocation of the main stair access to the Mall, the widening of the footpath outside the Orchard Centre and other solutions to problems affecting our client's investment.
Cushman & Wakefield totally represents our client's interest as if we owned the property. We monitor the market, report issues and take appropriate action. Our initiatives have not only held the value of the property in the face of a fairly dramatic change in retailing in Chatswood but we have also managed to secure the investment with strategic leasing deals and increased net income.
Our client can confidently devote his energies to his mainstream business with the confidence that his real estate investments are cared for by a comprehensive service from knowledgeable professionals.
Our services for this client extend to:
- Comprehensive representation of the client in all property matters
- Initiating and pursuing resolutions to all issues affecting the property.
- Full property management and leasing of the Centre,
- Negotiating insurance renewals including replacement valuations and rental estimates.
- Technical services including energy upgrades, tower replacement, building refurbishment, town planning matters and compliance.
- Negotiating with Council and other relevant authorities on matters affecting the investment.
- Examining alternate development options for the property.