Cbus, Mirvac shortlisted to buy part of “Melbourne’s front yard”

The site (marked with white buildings in images, above and below), was listed for sale last October.

Cbus Property or Mirvac will be allowed to build a c$2 billion mixed-use village on outgoing public land described in 2012 by late lord mayor and businessman, Ron Walker, as “Melbourne’s front yard”.

The 1.4 hectare holding was marketed for its potential to be replaced with a mix of hotels, apartments and offices.

The high-profile 1.4 hectare holding being sold by the state government’s VicTrack – to one of two groups left on a shortlist, it revealed this week – is Jolimont Rail Yard airspace on the south side of Flinders Street running the length of Exhibition Street/Batman Avenue to Wellington Parade South and the front of the Harry Seidler designed 1 Spring Street office.

An aerial image promoting the four storey office at 289 Wellington Parade South (centre) which shows the neighbouring tract earmarked for Treasury Square – actually more rectangle shaped – stretching up to the corner of Batman Avenue.

It is over this tract that residents within 279 Wellington Parade South, East Melbourne, capture the close-range, city and Federation Square views which helps keeps their complex prestigious and units so pricey. A modern four level office (289 Wellington Parade South) abuts Treasury Square.

Treasury Square: the site east of Federation Square East

The view from Swan Street Bridge shows the area, in front of the skyscrapers on the right, which late lord mayor Ron Walker described as “Melbourne’s front yard”. Source: Google Street View.

Longer term, rail lines east of the Russell Street Extension to Batman Avenue are planned to be decked over and become a public space known in planning circles as Federation Square East.

In 2012, Mr Walker unsuccessfully lobbied then-premier Ted Baillieu to acquire and replace the area beside and over train tracks on this side of Flinders Street with what could have been Melbourne’s tallest skyscraper.

The events supremo described the pocket between the city road, Birrarung Marr and Melbourne’s stadium precinct – visible by crossing the Swan Street Bridge (picture, right) – as the city’s “front yard”.

Two years later the next premier Denis Napthine sought a private sector partner to replace the Federation Square East block with a mixed-use complex comprising a high proportion of public space.

However the expense associated with building a deck over the train tracks to form the base of any new development was considered an inhibiting factor and that campaign failed.

Treasury Square’s floor flaw

Similarly, developers have reported that the cost to prepare Treasury Square with a construction floor would have to be factored into its purchase price.

No land value was quoted when the property was listed, however c$500m has been repeatedly speculated.

Indicative renders Colliers International circulated for the campaign showed three buildings of about 20 levels which could cost a total of more than $500m to complete.

The end price of the real estate product earmarked for Treasury Square has been estimated at c$2b.

The Andrews government is not seeking a development outcome or a master-plan with, say, a minimum public space requirement, before transferring the prominent site: this is a traditional sales campaign with the incoming owner able to propose what it likes factoring in local planning guidelines.

Cbus and Mirvac’s Melbourne CBD development pipeline

Coincidentally, Cbus was interested in bidding on this parcel in 2012, being part of discussions with Mr Walker.

The Melbourne based builder recently completed a 44-storey apartment development at nearby 35 Spring Street, which like Treasury Square, has aspect over Treasury Gardens.

Also in this pocket, it just started replacing the former Mercure Hotel next door to 1 Spring Street with a 35-level residential tower.

On the south east corner of Bourke and Queen streets – replacing four sites – Cbus is proposing a 55-floor, 64,500 sqm commercial complex with an estimated $1b end-value.

It is developing the substantial Collins Arch office and hotel, dubbed “the pantscraper”, at 423-447 Collins Street, too, and completed the Victorian Police Centre at 311 Spencer Street, near Southern Cross train station late last year.

Mirvac, meanwhile, has several CBD projects underway including a 31-level office it applied to build earlier this month at 383 La Trobe Street and a 14-storey commercial building and 44-floor build-to-rent complex on part of the former World Trade Centre site at 7-23 Spencer Street.

The Sydney developer is also completing a 40-level office at 477 Collins Street.

Last June it paid $333.5m on a funds-through basis for an as-yet-un-permitted 38-storey build-to-rent investment abutting Queen Victoria Market.

Treasury Square campaign to date

Victrack is represented by Richard Bowman, Real Estate Advisory Services partner with EY, which is headquartered in Melbourne at 8 Exhibition Street – overlooking Treasury Square.

John Marasco, Trent Hobart and Anna Cavar were appointed sole marketing agents closing the first round of an expressions of interest campaign last November.

In mid-January the government announced the four shortlisted parties included Brookfield Properties and Dexus – the latter which in 2016 won approval to replace 32 Flinders Street, across the road from Treasury Square, with residential and mixed use towers rising 41 and 14 storeys.

The government is expected to announce shortly which of Cbus or Mirvac can buy and build on the space.

The city view Colliers International marketed for Treasury Square.
Artist’s impression of the aspect over Treasury Gardens buildings at Treasury Square could have.
A proposed Treasury Square space fitted as a boardroom.

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Marc Pallisco

A former property analyst and print journalist, Marc is the publisher of realestatesource.com.au.