Demand for housing near city centres and the need to add value to existing shopping centres has been driving the mixed-use development trend, according to one commercial property agency.

Savills Australia has witnessed multi-use projects becoming increasingly prevalent in large cities, and moving beyond the traditional ground floor of shops in suburban unit blocks.

National Head of Retail Investments, Ben Parkinson, has observed more shopping centres enhancing their offering through scale and more sophisticated schemes in recent times.

“Larger shopping centre owners are now devising creative ways to engage with shoppers and improve amenity through residential and office uses, child care, dry cleaning, cinemas and even five-star hotels,” he said.

Savills anticipates that Australia’s ongoing population growth will maintain upward pressure on inner and middle-ring suburban house prices, which Mr. Parkinson said was “a major driver for increasing housing density in these areas”.

“In order to facilitate this growth, developers take the opportunity to up zone land to Mixed Use from, say, residential or commercial uses, a change that almost invariably gives rise to higher land values,” he said.

“The uplift is largely due to the increased utility of the land that enables medium-density development, and provides an impetus for owners to sell or redevelop the land.”

Mr. Parkinson went on to say that major infrastructure, particularly train lines, had become another key driver for mixed-use schemes.

Rick Silberman, Savills Director for Retail Investments, said that mixed-use schemes also provided the owners of much larger shopping centres with 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 activity and spend in the immediate catchment area,” he said.

One such landmark property is the Highpoint Lifestyle Centre at 98- 108 Hampstead Road, located in the highly sought after inner metropolitan suburb of Maidstone, just 8km from the Melbourne CBD which has sold to a local family investment group who were attracted to the existing income stream in addition to its future mixed-use potential.

Selling for $25,500,000, the property showed a passing yield of 4.75%, reflecting a clear benchmark for traditional large-format retail.

Highpoint Lifestyle Centre was sold by Ben Parkinson and Rick Silberman of Savills following high levels of enquiry from investors and developers who were drawn to the strong value-add potential of the site and growth profile of the location.

Highpoint Lifestyle Centre is underpinned by several ASX-listed retailers, including Baby Bunting, Supercheap Auto and Woolworths Petrol, and is situated on a prime corner site of 19,020sqm with an estimated yearly net income of approximately $1.12 million. 

Mr. Parkinson said that Highpoint Life Style Centre is a primary example of how investors and developers are becoming increasingly active and aware of the opportunities in the mixed-use development space.

“The demand seen for Highpoint Lifestyle highlighted how mixed-use opportunities are coming of age in response to the changing consumer demands of our burgeoning inner-city locations.”