Adventure wear outlet Kathmandu will create a large new flagship store in the Galleria shopping centre, opposite its main city store in Elizabeth Street.
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The outdoor retailer has signed a lease for about 1000 square metres in the Galleria at the base of 385 Bourke Street, a building owned by Dexus in a 50-50 venture with Canada Plan Investment Board.
Kathmandu's current city store is on the first floor of 360 Bourke, on Elizabeth Street's north-west corner opposite Galleria, where it leases space alongside Bank of Melbourne, Flight Centre and Pacific Smiles Dental.
It will open the new store towards the end of the year, the group's property and leasing manager, Mark Ashton, said.
Mr Ashton said Kathmandu had searched for a new large-format city space since early 2014. "Our brief was to secure a location that would allow us to incorporate our flagship model in terms of size, location, sustainability and exposure," he said.
The lease will involve amalgamating three stores on the ground level of 385 Bourke with two on level 1 to create a shop over two levels facing Bourke Street Mall, Dexus' retail head Stewart Hutcheon said.
"This is a significant partnership ... that will underpin the performance of Galleria, repositioning it as an outdoor, lifestyle and health shopping destination," he said.
Dexus and Kathmandu would not discuss rental details but retail space on the west side of Elizabeth Street attracts about $1500 per square metre, industry figures suggest.
On that estimate Kathmandu will have an annual outlay of around $1 million for its site.
Most of Melbourne's adventure and outdoor stores including Paddy Pallin, MacPac, Bogong and Mountain Designs are clustered together along a city block in Little Bourke Street.
Kathmandu broke the mould early by its aggressive mainstreet positioning on a prominent city corner site.
Colliers International retail leasing director Ben Tremellen said Kathmandu's expansion could disrupt the positioning of the city's other adventure outlets.
"The other ones will try to follow. It could lead the charge in more activation on the west side of Elizabeth Street which will grow the area's rents," Mr Tremellen said.
Kathmandu said it would work towards a five-star Green Star rating for the new flagship store.
