Melbourne Property Market Update: Grollo Developments, Flinders Lane, and More
This week's Melbourne property market news includes updates on Grollo developments, activity in Flinders Lane, new permits issued, the fallout from the Lion Property Group collapse, and upcoming South Melbourne auctions. Key areas of focus include worker accommodation projects, office space development, and residential sales.
Grollo Developments: Hotham, Bogong, and Melbourne CBD
The Grollo family continues to be active in Victorian property development. Early last year, they purchased Hotham Airport near Dinner Plain for $6.7 million and have submitted plans for a worker accommodation hub. They have also acquired Bogong Village, situated between Mount Beauty and Falls Creek, with plans for another worker accommodation project. However, the Grollos are not pursuing the 99-year operating leases for Mount Baw Baw and Lake Mountain offered by the Allen Government.
In Melbourne's CBD, the Grollos own half a block of King Street, near the Rialto office towers, which were built by Rino and Bruno Grollo in the 1980s. They jointly own the Rialto with GIC, Singapore’s sovereign wealth fund, which purchased the shares of Kuwaiti-controlled St Martins Properties for $644 million in 2020.
Flinders Lane Development: A Whac-A-Mole Situation
The owner of the premium office tower at 101 Collins Street faces renewed challenges to protect its views along Flinders Lane. Just as they secured height restrictions on one building, another property is poised for potential redevelopment.
A three-level property at 103-105 Flinders Lane, on the corner of AC/DC Lane, is for sale, projected to fetch around $15 million. The owners originally purchased the 1186-square-metre warehouse for £67,000 in 1956. This follows the recent sale of No.107-109 Flinders Lane for $14.8 million, which had development height limits imposed by the Commonwealth Super Fund (owners of 101 Collins Street) in 2015 to safeguard views from a potential 43-level tower. The fund had purchased No.107-109 for $15 million. The new listing presents a "Whac-A-Mole" scenario for maintaining neighborhood aesthetics.
The property at 103-105 Flinders Lane occupies a 332-square-metre site and features a ground floor café, an upstairs office, and the basement nightclub leased to Bar Bambi. This basement was the original location of the Cherry Bar, which influenced the renaming of Corporation Lane to AC/DC Lane 21 years ago. Cushman & Wakefield, led by Oliver Hay, Daniel Wolman, and Leon Ma, along with Alexander Robertson & Co.'s Kristian Peatling and Warwick Bramich, hold the listing. In related news, Melbourne will celebrate the 50th anniversary of AC/DC's "Long Way to the Top" performance with a lighting installation on AC/DC Lane and a concert at Federation Square.
New Permits: Exploration Lane
The site at 9-11 Exploration Lane, behind the Exploration Hotel, has received a permit for an eight-storey office building, approximately 31 meters tall. The 170-square-metre site is owned by the Knowles Group, a retirement village developer. The site was previously intended for a 130-room hotel in a joint venture with the late Jonathan Hallinan. The Knowles Group attempted to sell the land in 2018 for around $50 million, with a permit for a 34-storey hotel, but found no buyers. They originally purchased the land in 2010 for $2.15 million.
Lion Property Group Collapse: South Yarra Impact
The collapse of the Lion Property Group continues to affect the market. A block of flats at 1-17 Adams Street, South Yarra, sold for $6.1 million, a 25% decrease from its 2023 price. Drake Developments' Colin Drake settled the purchase last month, concurrent with the unraveling of the $130 million Lion Ponzi scheme. Drake plans to construct six townhouses on the 774-square-metre site, replacing the 14 vacant 1950s-era flats near Toorak Road facing Fawkner Park. The new development replaces the costly four-level, seven-unit design acquired by Lion in 2023. Fitzroys’ Lewis Waddell, Ben Liu, and David Bourke managed the sale.
South Melbourne Auction: Bells Hotel and Park Street
Former Carlton & United Breweries boss Peter Filipovic and his partners, Dave and Merv Shannon, are selling a property associated with their $20 million Bells Hotel purchase. The 155-square-metre shed at 52-54 Tope Street is scheduled for auction and is expected to sell for around $1.7 million. The warehouse served as additional function space for the pub. Stonebridge agents Dylan Kilner and Max Warren hold the listing but declined to comment.
Also up for auction is the freehold of Park Street Pasta & Wine at 268 Park Street, located on the corner of Perrins Street. Park Street Pasta & Wine recently renewed its five-year lease, with two five-year options, generating $95,000 in annual rent, suggesting a sale price exceeding $1.8 million. Stonebridge’s Nic Hage, Ian Lam, and Kilner are handling inquiries but also declined to comment. Records show the property was last sold in 2016 for $1.78 million by the late nightclub owner Darren “Razzle” Thornburgh, who passed away shortly after in Barmah, Victoria.