The projected value of the Sylvia Park Galleria project has been assessed by independent valuer CBRE at $1.12 billion.
Kicking off in March and expected to be completed by mid-2020, the expansion will add approximately 60 new retailers, a two-level 8,100 sqm Farmers Department store, a new dining precinct and 18,000 sqm of retail space to the centre, including a new multi-deck carpark, with 900 car parks.
According to Sylvia Park retail leasing manager Aubrey Cheng, the landlord is focusing on maintaining the centre’s relevance by enhancing and elevating the experience and bringing in new international brands and concept stores to create excitement. There are currently more than 200 retailers at Sylvia Park.
“You have to keep it dynamic and exciting. We don’t want retailers with dull shopfronts,” Cheng told Inside Retail. “We’re now going through the process of curating our retail mix through leasing. We want to make sure we get [the retailers’] flagship store, their best shop manager, their widest range of product.”
Cheng added that car parking is essential to keeping shopping centres as convenient and accessible as possible and making it a pleasurable experience for the customer.
“The customer experience starts with the car parking accessibility, how you get to to the site and how you use our valet parking offer or carpark management system that directs you to available car parks,” Cheng said. “Then the way we’ve located the car parking means it feeds directly to the Galleria level – you’re not going through a maze to find your way into a centre. We want it to be as easy as possible.”
Upon completion, the centre will have 90,000 sqm of retail space and around 5,000 car parks, the company said.
The project will be debt funded from existing facilities and is expected to provide an initial net incremental income yield on capital expenditure of 5.7 per cent, growing to 6.2 per cent by year three and an incremental internal rate of return in excess of 10 per cent, it said.
Chief executive Chris Gudgeon says construction cost certainty had been secured by working through an early contractor involvement process with its builder, Naylor Love.
“By working collaboratively through critical design, planning and programming elements we have been able to negotiate a fixed price lump sum contract,” he said.
In addition to the expansion project, other general remedial works costing approximately $11 million will be carried out.
Kiwi Property’s focus on cost certainty comes during a period of rising construction costs, which caught out Fletcher Building, the country’s biggest construction firm, facing losses of $952 million in its buildings and interiors division from blowouts in several major construction projects.
The stock recently traded at $1.33 and is down 6.6 per cent over the past 12 months.