Gurner and Qualitas buy out development partner Newmark for Jam Factory project on Chapel Street

Gurner and Qualitas buy out development partner Newmark for Jam Factory project on Chapel Street

(L-R) Gurner's Ahmed Fahour, Tim Gurner and Kate Cookes

Luxury property developer Gurner and alternative real estate manager Qualitas have this week bought out the remaining interest in the Jam Factory redevelopment on Melbourne's iconic Chapel Street, in tandem with a revised delivery schedule and structure that focuses more on the heritage façade and retail space than the initial plan.

In acquiring the interest from primary development partner Newmark Capital, Gurner and Qualitas are injecting $180 million in equity to settle on and develop the site in South Yarra, which they expect will deliver a $2.75 billion "city-defining" project.

This compares to the $1.5 billion figure reported when the redevelopment received council approval in April 2022, and will also involve a repositioning of the Village Cinema complex to anchor it on the north-facing, 1,800sqm public piazza, intended for launches and community events.

The owners have downgraded the amount of space that will be dedicated to commercial offices from 20,000sqm to 15,000sqm, while there will be slightly more retail space, up from 18,500sqm to 20,000sqm.

The revised ownership structure will allow the joint venture to phase the delivery of the project into smaller stages that are able to be built independently, which Qualitas and Gurner note is important in this challenging construction environment to de-risk the development site long-term.

Gurner reports its team is already collaborating with Council to ensure approval of the Stage One scheme within months, to allow demolition and construction of stage 1 to start at the beginning of 2025 and the entire project to have commenced construction by the end of 2025.

Complementing the commercial offering will be two hotels and three luxury residential towers facing north towards the CBD skyline and north-west towards the bay with uninterrupted 360-degree views.

The developer had previously indicated there would be 400 residences and up to 200 hotel rooms within the precinct, but has clarified that the revised scheme will include 450 to 550 large homes.

"Building on the vision we created with Newmark, I truly believe this to be Melbourne’s most important and iconic regeneration site," says Gurner founder and executive director Tim Gurner.

"We are very excited to be able to deliver this incredible project with our long term strategic partner in Qualitas and we know together we can revitalise this critical site for Melbourne.

"There is no other site like this in Melbourne with 20,000sqm of prime South Yarra land sitting on Melbourne’s most important retail strip of Chapel Street, it’s an iconic site that we know we can bring back to its glory days."

He says the group is "truly humbled" to be able to have creative control of such an important Melbourne icon, explaining he feels immense pressure to do it justice for all Melburnians and visitors to enjoy.

"With this transaction now finalised we can turn our attention to fast-tracking construction and making this city-shaping redevelopment happen. We’ll breathe new life into the site and deliver our signature level of amenity, service and residences alongside world class retail and commercial," he says.

"The retail, hospitality, hotels and commercial creation is what is most exciting about this site to be able to bring back an icon to Melbourne’s entertainment and shopping heart land with world class operators and brands.

"We’ll be taking opulence, sophistication and luxury to a whole new level with our sky-high mansions, delivering a level of residence that was previously only found on Toorak’s most exclusive streets. Think arch-shaped pools, basketball courts and recreation areas, private events, exclusive resident services, and amenities that rival those of the world’s most exclusive hotels."

Newmark spokesperson Chris Langford says the sale provides a clear pathway forward and delivers investors with certainty in an unpredictable market.

"After eight years of ownership, the decision to divest aligns with our commitment of delivering an outcome for our investors in the Newmark Jam Factory Property Trust," says Langford.

"We look forward to Gurner and Qualitas consolidating the vision for the site that we have collaborated on."

In a joint statement, Village CEO Clark Kirby and executive chairman Robert Kirby claim the "deeply articulated Jam Factory and new Village Cinemas will become the most iconic lifestyle/entertainment destination in Australia".

"The new Village Cinemas will now be on the ground floor and integrate beautifully into the Gurner vision of a central piazza, exciting eclectic retail and five-star hotel."

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