Offices on the ground and upper levels occupied by the previous owner, Vision Australia, will be converted into about 50 luxury hotel suites.
The popular Belgian Beer Cafe will stay on the ground floor of Ormond Hall, as well as outdoor stalls that spill into the huge forecourt.
Stockland state manager apartments, Matt Bedford, told Capital Gain the group had always been keen to develop the 1.5-hectare site into something that would encourage public use, and was collaborating with Belgian Beer Cafe owner George Christopoulos on the project.
Tenders for hotel service providers are expected to be called next year, with the hotel opening by the summer of 2010.
Stockland paid Vision Australia $28.3 million for the site at the corner of Moubray Street last October. It is planning a luxury apartment building at a corner of the site, near the Chevron.
Other apartment sites on Stockland’s books include a 258-unit block in South Yarra, and almost 200 apartments in two blocks at Tooronga Village.