Bar and sex-on-premises venue Club 80 will be forced to relocate or close at the end of its tenancy – after the Collingwood buildings it has occupied for more than 20 years sold to an investor this week, within days of being advertised.
The incoming landlord plans to re purpose the holdings into swank offices after paying a price speculated to be close to $8 million.
With the deal, an expressions of interest campaign which was set to close on November 20 has been cancelled.
The purchase includes:
- a triple storey art deco replica built in the 1980s at 8 Peel Street, with 247 square metres of internal area and a crossover, and
- a three-storey art deco brick warehouse with 1038 sqm of space at 10 Peel Street, opposite, and with easterly aspect over, the near-new Peel Street Park.
When the Club 80 sites hit the market, they carried a combined guide price of about $7.5 million – valuing the land at about $18,000 per sqm – a suburb watermark, according to local agency sources.
The actual result could price the land closer to $19,000 per sqm.
Marketing agents, Knight Frank’s Danny Clark, Andrew Hansen and Jack De Lutis with GrayJohnson’s Rory White, Matt Hoath and Brett Simpson, declined to comment about any part of their deal when contacted.
Club 80 at 8 and 10 Peel Street will be refurbished into offices
Covering 417 sqm in a tree-lined part of the street with rear laneway access, any incoming owner could have entertained a variety of new development outcomes for the Club 80 land including apartments, an office, a hotel – or a combination of these.
Instead, the purchaser will refurbish the existing space into offices. Because a mezzanine will be ripped out, the lettable area will shrink to about 895 sqm.
Collingwood, with Richmond/Cremorne, East Melbourne and South Melbourne, command the highest commercial rents outside of the Melbourne CBD and Southbank.
High character warehouse-converted-office space, like that now proposed for 8 and 10 Peel Street, is the most sought after, with occupiers regularly known to pay more than $600 per sqm, per annum.
In April we reported about Sony Music paying about $500 per sqm/pa, for its new Melbourne office headquarters, a graffiti-covered former factory with bars on the window, opposite the Richmond train station (pictured, below).
Sex sells…increasingly in Melbourne to property developers
The Club 80 Peel Street sites aren’t the first licensed for sex to recently pique the interest of developers across the city.
In 2017 Crema Group paid about $15 million for the double-storey South Melbourne building which for 30 years prior accommodated brothel The Pink Palace. This site, 8-16 Palmerston Crescent, is now mooted for an 18-storey apartment tower, The Eighth.
Three years ago, private developer Tony Huang paid $12.66 million for Elsternwick parlour The Daily Planet – and two neighbouring buildings – a deal which valued the land at $10,200 per sqm, reportedly a suburb record.
Former city gay sauna Steamworks at 279-291 La Trobe Street, which closed in 2008, was later acquired by the Coptic Orthodox Church and recently rebuilt as Eporo Tower, a cathedral with upper level apartments.
In September we reported that the operator of nightclub Lounge, which closed at 243 Swanston Street after 29 years, rented Carlton’s former Hellfire Club S&M venue, to reopen as a hospitality venture which will trade 24 hours a day.
Longer term it is expected developers will build into the airspace of the ex-Hellfire properties in Queensberry Street.
Collingwood blue collar continuing to make way for white
Two months ago, Pace Development Group listed for sale a compact 11-level office under construction on a 510 sqm block, formerly occupied by a factory, at 51 Langridge Street.
Just prior, we reported about a warehouse-converted-office with development upside at 4-12 Langridge Street which sold for $3.5 million, pricing every square metre of the Commercial 1 zoned land at $9500.
Speaker and director of apartment builder Domain Hill Property Group, Peter Cahill, has been recently selling down adjoining Collingwood industrial sites as residential development plays, banking a total of more than $20 million, according to sources.
Earlier this month, the developer offloaded sites known as 60 and 70 Rokeby Street following another campaign also targeting builders.
Four months ago, design house Bar Studio, which is based in the city’s Flinders Lane, outmuscled investors to acquire the red brick warehouse at 47 Easey Street part-occupied for 20 years by alternative radio station PBS.
Bar Studio plans to owner-occupy the double-storey Collingwood building which cost $6.85 million.
In 2017, the record price for an established home in the suburb was set when a church-converted residence at 6 Oxford Street traded for $6.1 million.
Like many Melbourne suburbs, Collingwood will soon be distinguished by a substantial skyline of mid-rise buildings.
The Liberman family backed Impact Investment Group is developing a 12-storey office in the area: The Northumberland, at 54 Wellington Street, is expected to have an end value of $111 million upon completion. Cosmetics giant AESOP will occupy three floors of the 15,109 sqm complex, set to open next year.
Tim Gurner has a couple of active Collingwood projects: a unique, rectangle site at 1-57 Wellington Street is earmarked to become a series of mid-rise apartment buildings, the highest about 11 floors, within a village being marketed as Victoria and Vine.
Mr Gurner is also constructing a 12-storey mixed-use project at 23-33 Johnston Street – in May committing Sydney-based Veriu to occupy the 95-key hotel component.
In April, US-based Hines, one of the world’s largest privately owned real estate investment groups, paid Manfax Hardware and Paint owner Robert Larsson $28.5 million for a 2120 sqm site covering 36-52 Wellington Street.
Hines plans to replace the block with Australia’s first timber tower – the height of which is yet unknown (while Mr Larsson went on to buy an unrenovated Collingwood office, 22-24 Northumberland Road, off market, for $7.35 million).
Last year, Zhang Weian’s V-Land paid $40 million for the former Glo-Weave Shirt factory on 4287 sqm at 128-144 Wellington Street, a site expected now to be replaced with several major structures.
Peregrine Projects, controlled by accountant Joseph Chahin, is also in the pocket: building an eight storey office at 64-88 Langridge Street.
Mr Chahin sold a neighbouring parcel (60-62 Langridge Street) to Sydney-based Tribe Hotel Group which plans to redevelop it as its flagship inn.