West Melbourne hotel off the cards as developers sell project for a fraction of expectation
A trio of Melbourne businessman have shelved plans to build a hotel at the Melbourne CBD’s north west tip following an unsuccessful campaign to sell it as a permit-ready opportunity.
Probuild founder Phil Mehrten, Resimax Group director Aziz “Ozzie” Kheir and developer, Frank Palazzo were hoping to collect about $75 million when they listed the West Melbourne portfolio of three neighbouring parcels on 2004 square metres of land four months ago.
Instead they will offload 46 per cent of the holding – 920 sqm – for 12 per cent of the price ($9.5 million).
Moreover, the portion being traded – 102-108 Jeffcott Street – was the only one permitted to have its airspace substantially built into.
CBRE’s Mark Wizel, Josh Rutman, Scott Orchard and Scott Hawthorne are representing the vendors.
The neighbouring historic buildings – 355 and 371 Spencer Street, covering a total 1084 sqm of land – are being advertised as remaining.
Constructed in about 1888, the former is known as the Sands and McDougall building and once accommodated a publishing house.
Mr Mehrten, Mr Kheir and Mr Palazzo paid Hume Partners, backed by AFR Rich Lister Peter Scanlon, $38.8 million for the portfolio of West Melbourne sites in 2016.
The value attributed to 102-108 Jeffcott Street was $6.1 million.
The redundant hotel plan
The Jeffcott Street building was to have been replaced with a 23-level, 180-suite inn connected via a bridge over McDougall Lane to the Spencer Street properties which were set to be fit out as swank offices.
Guests in south facing hotel rooms would have had views into Melbourne Assessment Prison yard across the road.
There is no north facing vista, however, care of Deague Group’s adjoining Melbourne Village project which contains 27 storey apartment buildings (coincidentally, Hume Partners offered the site making way for Melbourne Village, 83-113 Batman Street, permit-ready in 2015, along with the three properties Mr Mehrten, Mr Kheir and Mr Palazzo bought).
An Ermin Smrekar designed office at 115 Batman Street sold for $22 million in 2018 following a campaign which promoted its airspace redevelopment potential.
Vendors in the news
Mr Palazzo has developed medium and high-density residential projects throughout the city. He is also a shareholder in Simonds Group and for a period dated a character from TV show The Real Housewives of Melbourne.
As well as property developing, Mr Mehrten and Mr Kheir both own champion racehorses.
Between 2017- 2018, the former sold investments in Hampton, Hawthorn and Prahran.
Mr Kheir owns Flinders Lane’s Adelphi Hotel– renowned for its rooftop infinity pool.
Earlier this year the Resimax Group director spent more than $300 million on an 828-hectare piece of the Eynesbury Estate, in Melbourne’s west, approved to make way for about 4500 dwellings.
