A tough retail market has shaped the mix of businesses proposed for a radical makeover of the Ace Cinema property in Subiaco.
A tough retail market has shaped the mix of businesses proposed for a radical makeover of the Ace Cinema property in Subiaco.
INTERESTS associated with Malaysian entrepreneur Ming Ng are driving an ambitious plan to redevelop Subiaco’s Ace Cinemas site with a hotel, food court and suite of luxury movie theatres.
The $95 million proposal on Hay Street includes a six-storey office tower with retail at ground level as well as a nine level, 217-room hotel.
The Ng family’s company, Dradgin Pte, paid $16.8 million for the Ace Cinema site in 2011 after receivers for Luke Saraceni’s Pakwest company put the landmark Subiaco property up for sale.
The acquisition came just months after Dradgin outlaid $67 million for the neighbouring office property at 502 Hay Street, better known as iiNet’s corporate headquarters.
These two acquisitions gave Dradgin a significant holding and, according to property consultant Lloyd Collins, one of the last development sites in Subiaco’s town centre.
This precinct west of Rokeby Road has developed a strong office flavour but the retail space in the area has struggled to draw the crowds.
Mr Collins said it took more than 12 months of negotiations to lease the ground floor retail sites at 502 Hay Street before a deal was inked with broadband provider iiNet to launch its first retail outlet.
“We bought it (502) with three vacancies knowing that they (Pakwest) hadn’t leased three ground floor tenancies in two and a half years,” Mr Collins told WA Business News.
“We tried for 12 months and in that time two existing tenants fell over; we have since leased those premises to iiNet and after a year we applied to council to rezone the other three retail tenancies to office and we let them within weeks.”
Mr Collins, who has worked for the Ng family since it purchased the Atrium office tower in 1995, said the experience at 502 played a big part in determining the mix of businesses proposed for the Ace Cinema site.
He said the combination of a hotel, food court and a piazza would make the project a destination for shoppers and visitors.
“Philosophically we have made the decision there will be no nightclubs or bars,” Mr Collins said.
“I don’t think it’s needed. Subiaco has enough of that in the strip, and with cinemas and a food court we are looking for families.”
The financial success of this development plan hangs on its office component, however.
To make the Ng family’s investment stack up, the site needs to support at least 10,000 square metres of office accommodation.
This space can command high rents in the current market and would partly offset the cost of the luxury cinema, the foodhall and the 1,500sqm piazza.
Mr Collins said the height of the proposed office building and the hotel could prove to be an issue for both the City of Subiaco and the local residents, but claimed his market research pointed to broad support for the development.
The Ace Cinema site has courted controversy since 2008, when the council granted approval for a four-storey mixed-use development featuring luxury apartments, office space and a boutique cinema.
This $54 million plan was resurrected by the former property owner Mr Saraceni in 2010 and again attracted criticism from residents who feared losing their local cinema complex.
The Dradgin proposal features a cinema but its 600-seat capacity has been cut by about two thirds and in its place there are four, 24-seat screening rooms and a 96-seat theatre.
These boutique theatres will serve food and wine to patrons while they watch a film.
It’s a concept that has the support of current Ace Cinema operator David Pye, who believes there is strong demand for this high-service model.
And as part of a broader development including a hotel and foodhall, Mr Pye said it would draw people to Subiaco and go some way to revitalising the area and boosting trade for local businesses.
The retail precinct of Subiaco has been hit by tough retail conditions as well as the closure of the popular Pavilion Markets, which has been boarded up since 2007, drawing the ire of traders and local residents.
The Pavilion site on the corner of Rokeby and Roberts roads was subject to a proposal for a 19-storey tower with apartments and short-stay accommodation, as well as retail at the ground level.
The Metropolitan West Joint Development Assessment Panel rejected this plan and the applicant, Sydney-based D2 Property Development, has referred it to the planning minister.
The Dradgin proposal for the Ace Cinema property is currently with the City of Subiaco and the period for public submissions runs until February 22.
It will be considered by the Development Assessment Panel, which has the power to override the City of Subiaco’s decision.
The panel is expected to assess the project in April.
