150 Queen Street

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Earlier this year, Urban.com.au posed the question: "<a href="https://www.urban.com.au/news/is-2018-the-year-of-commercial-for-the-melbourne-market">Is 2018 the year of commercial for the Melbourne market?</a>" As 2018 has rolled on this notion has continued to be reinforced with developers snapping up and consolidating sites or scrapping their apartment developments all together, in favour of office. 

At the beginning of the week we <a href="https://www.urban.com.au/news/double-delight-pdg-releases-new-images-of-two-key-melbourne-projects">highlighted PDG's revised development intentions</a> for the former Toyota site at the top end of Elizabeth Street. Dubbed Elizabeth North the three tower commercial scheme replaces an earlier four building residential scheme, in response to the current state of the residential apartment market.

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public//pictures/article-images/elizabeth-north_pdg_0.jpg" rel="gallery-all"><img alt="PDG's Elizabeth North at 611-697 Elizabeth Street. Image: PDG" class="image-article-full-width-580px" height="327" src="/sites/urban.melbourne/files//styles/article_full_width_580px/public/pictures/article-images/elizabeth-north_pdg_0.jpg?itok=ZtVJfM7Q" title="PDG's Elizabeth North at 611-697 Elizabeth Street. Image: PDG" width="580"></a>

<figcaption>PDG's Elizabeth North at 611-697 Elizabeth Street. Image: PDG</figcaption></figure>The latest site set to switch to commercial use appears to be <a href="https://www.urban.com.au/projects/555-collins-street-melbourne">555 Collins Street</a>, after Fragrance Group sold the site to Charter Hall for a reported $140m, according to the <a href="https://www.afr.com/real-estate/charter-hall-swoops-as-singaporeans-exit-in-140m-collins-st-deal-20181025-h174ij">AFR</a>. This comes after Fragrance only managed to achieve sales of 46 per cent of the 625 total apartments in the 12 month period since the project was launched to the market.

Charter Hall's recent acquisition adds to its existing land holding at 55 King Street which adjoins 555 Collins Street and now forms part of a combined development site of 4,627 sqm. Applying a plot ratio of 18:1 as per the Central City planning controls would result in a developable Gross Floor Area of 83,286sqm or just shy of 67,000sqm NLA. 

Taking into consideration floorplate sizes, setback requirements and overshadowing controls etc. a single commercial office building of around 30-35-storeys could be expected on the combined site. Charter Hall had previously investigated developing an office building of around 27-storeys at 55 King Street.

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public//pictures/article-images/55_king_0.png" rel="gallery-all"><img alt="An unbuilt concept for 55 King Street. Image: Charter Hall" class="image-article-full-width-580px" height="234" src="/sites/urban.melbourne/files//styles/article_full_width_580px/public/pictures/article-images/55_king_0.png?itok=bw9Zfs_5" title="An unbuilt concept for 55 King Street. Image: Charter Hall" width="580"></a>

<figcaption>An unbuilt concept for 55 King Street. Image: Charter Hall</figcaption></figure>In recent months Mirvac has acquired the 383 LaTrobe Street site from Sterling Global for a cool $122m, after the latter gained approval for a 70-storey mixed-use tower designed by Ateliers Jean Nouvel. A 5-storey office building currently leased by the Australian Federal Police (AFP) occupies the 2,850 sqm site. The AFP are due to relocate to 311 Spencer Street in late 2020. In the interim it is understood that Mirvac have engaged Cox Architecture to develop a commercial scheme for the site.

Dexus, which sold a development site at 32-44 Flinders Street with a permit for a 54-storey tower, has in recent months snapped up two sites at 52 and 60 Collins Street for $230m allowing them to proceed with single commercial development. The site is located opposite QIC GRE's 80 Collins Street redevelopment which is currently under construction.

Finally, Cbus Property has resumed demolition of 150 Queen Street to allow for the creation of a temporary park, while it finalises plans for a Bates Smart-designed commercial development. Cbus' extensive redevelopment encompasses a consolidated land holding comprising 140 and 150 Queen Street, 27 McKillop Street and 423 Bourke Street, and is expected to have a development value of around $1bn, not too dissimilar to its <a href="https://www.urban.com.au/new-apartments/collins-arch-447-collins-street-melbourne">Collins Arch</a> project. 

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public//pictures/article-images/img-9337.jpg" rel="gallery-all"><img alt="Demolition has resumed on 150 Queen Street. Image: Mark Baljak" class="image-article-full-width-580px" height="387" src="/sites/urban.melbourne/files//styles/article_full_width_580px/public/pictures/article-images/img-9337.jpg?itok=s4u-c7JK" title="Demolition has resumed on 150 Queen Street. Image: Mark Baljak" width="580"></a>

<figcaption>Demolition has resumed on 150 Queen Street. Image: Mark Baljak</figcaption></figure>Based on the above, it looks like the commercial trend of 2018 is likely to drag on into 2019 as planning applications are lodged. Watch this space.

 
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Laurence Dragomir

555 Collins Street continues the commercial theme for 2018

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As reported in <a href="https://www.theage.com.au/business/companies/cbus-set-to-swoop-on-1b-development-site-20180227-p4z1zs">The Age late last month</a> speculation is growing that developer Cbus Property is leading the charge to acquire a combined development site at 140-150 Queen Street and 27 McKillop Street.

This would follow what would appear to be a pre-emptive purchase of a neighbouring site at 423 Bourke Street, which an 11-storey office block currently occupies.

Combined all three sites would result in a approx. 3,000 sqm development site capable of accommodating a base Gross Floor Area of 54,000 sqm under the 18:1 Floor Area Ratio currently permitted in the Central City Zone.

With all this in mind, we at Urban.com.au have decided to revisit <a href="https://www.urban.com.au/news/development-scenario-140-150-queen-street">an earlier study</a> on the potential development opportunity of the sites sans 423 Bourke Street from late last year.

The piece also provides a brief history of the site and the protracted legal battle between adjoining owners CEL Australia (the now defunct Tower Melbourne) and Colonial Range (140 Queen Street + 27 McKillop Street).

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/diagram_03-01_0.png" rel="gallery-all" title="Previous UM study from November 2017"><img alt="" class="image-article-full-width-580px" height="294" src="/sites/urban.melbourne/files/styles/article_full_width_580px/public/pictures/article-images/diagram_03-01_0.png?itok=PRpCJD-E" title="Previous UM study from November 2017" width="580"></a>

<figcaption>Previous UM study from November 2017</figcaption></figure>Revisiting the development potential of the site, I decided to change tact from the previous study and work on the premise of achieving a similar height development to Tower Melbourne's 226m of height.

The expanded site area allowed for a re-orientation of commercial floor plates and the ability to provide a north facing park along the Queen Street frontage which ties into the surrounding laneway network.

A mixed-use building of 226m and 62-storeys was achieved providing a statement building to the corner which extends beyond the heights of the under construction 405 Bourke (39-storeys / 161m), 385 Bourke Street (43-storeys / 169m) and ANZ Gothic (37-storeys / 162m).

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/140-150_queen_proposal_driagram.png" rel="gallery-all" title="Indicative Development Proposal for consolidated site."><img alt="" class="image-article-full-width-580px" height="432" src="/sites/urban.melbourne/files/styles/article_full_width_580px/public/pictures/article-images/140-150_queen_proposal_driagram.png?itok=6j-XX9W0" title="Indicative Development Proposal for consolidated site." width="580"></a>

<figcaption>Indicative Development Proposal for consolidated site.</figcaption></figure>Programme breakdown:

<ul>
<li>1,000m2 park fronting Queen Street</li>
	<li>2,950m2 Sky Park at across levels 26 &amp; 27.</li>
	<li>Ground floor retail </li>
	<li>42-storeys of commercial office space (49,265 m2 GFA)  with floor plates varying from 1,475 - 1,575m2</li>
	<li>26-storeys of hotel (or residential)</li>
</ul>
<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/140-150_queen_program_diagram.png" rel="gallery-all" title="Breakdown of building program"><img alt="" class="image-article-full-width-580px" height="432" src="/sites/urban.melbourne/files/styles/article_full_width_580px/public/pictures/article-images/140-150_queen_program_diagram.png?itok=V4ptcaft" title="Breakdown of building program" width="580"></a>

<figcaption>Breakdown of building program</figcaption></figure>A development of this scale would result in an overall Gross Floor Area of 78,760m2 and an FAR of 26.25:1. This would require a Floor Area Uplift (FAU) of 8:1 or 24,760m2 which represents an additional 44% of floor area.

This breakdown is reflected in the diagram below. To achieve this, a number of public benefits would be required. These are covered by the provision of commercial floor space, public open space, the Sky Park, and the hotel component.

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/140-150_queen_far_fau_diagram.png" rel="gallery-all" title="Floor Area Ratio GFA and Floor Area Uplift GFA comparison"><img alt="" class="image-article-full-width-580px" height="432" src="/sites/urban.melbourne/files/styles/article_full_width_580px/public/pictures/article-images/140-150_queen_far_fau_diagram.png?itok=wGe3qdzJ" title="Floor Area Ratio GFA and Floor Area Uplift GFA comparison" width="580"></a>

<figcaption>Floor Area Ratio GFA and Floor Area Uplift GFA comparison</figcaption></figure>
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Development Scenario: 140-150 Queen Street Redux

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After a protracted legal battle with a Singaporean rival which ground demolition works on its Tower Melbourne project, developer CEL Australia has walked away from the project. Demolition of the existing building on the corner of Bourke and Queen Street ground to a halt in 2013 following a dispute about access to the property and damage to the adjoining buildings at140 Queen Street &amp; 27 McKillop Street.

Fellow developer Colonial Range, filed legal action in the Victorian Civil and Administrative Tribunal seeking to have the planning permit for the project revoked, which delayed the start of construction of the 226m Elenberg Fraser designed tower. With VCAT finding in its favour, CEL Australia was ready to recommence works onsite, however these plans were scuttled after Colonial Range decided to take the matter to the Supreme Court.

Colonial Range, then known as Ruby Group, originally owned both sites and had approval planning approval for a 27-storey serviced apartment tower designed by Kerstin Thompson Architects at 140 Queen Street which bridged across Penfold Place and featured a new laneway connecting Penfold Place and McKillop Street.

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/queen_street_tower.jpg" rel="gallery-all" title="140 Queen Street had approval for a 27-storey serviced apartment tower. Image: KTA"><img alt="" class="image-article-full-width-580px" height="359" src="/sites/urban.melbourne/files/styles/article_full_width_580px/public/pictures/article-images/queen_street_tower.jpg?itok=YdzYVI-x" title="140 Queen Street had approval for a 27-storey serviced apartment tower. Image: KTA" width="580"></a>

<figcaption>140 Queen Street had approval for a 27-storey serviced apartment tower. Image: KTA</figcaption></figure>It curiously sold off 150 Queen Street to Charter Hall who then onsold it to Chip Eng Seng under its Australian subsidiary CEL Australia. They promptly engaged Elenberg Fraser to design a  71-storey tower comprising 555 apartments, but it would appear Tower Melbourne is set to join the long list of Melbourne Never Builts after requests by purchasers to cancel their contracts, resulting in CEL rescinding on the remainder.

<blockquote>
The protracted and complex nature of the legal proceedings have forced the cessation of any works on site since September 2013, and despite ongoing efforts to resolve these disputes, CEL Australia is still unable to proceed with any further demolition works on the existing building.

Consequently, the building of Tower Melbourne has been significantly delayed and the project is unable to be delivered within the Date of Registration stipulated in the contracts of sale.

CEL Australia’s first priority has always been to deliver Tower Melbourne in line with its vision for the project, and as such, has done everything within its legal power to try to reach a resolution. Regrettably, it has become increasingly apparent that there is still no resolution in sight, and with further proceedings still pending, Tower Melbourne in its current form is no longer viable for CEL Australia to develop.

Due to the delays, a number of purchasers have requested to cancel their contracts. In these instances, CEL Australia has granted their requests. Rather than waiting until the Registration Date has lapsed, CEL Australia will rescind the contracts of the remaining purchasers to release them from their contracts as soon as possible. CEL Australia is in the process of informing purchasers of this outcome.

CEL Australia has made this decision in order to ensure the best possible resolution for all stakeholders, and allow purchasers to move on.

- CEL Australia, November 2017
</blockquote>

Following from this decision it has since emerged that CEL and Colonial Range have agreed to collectively sell their respective sites. The landholdings are being marketed off market through Colliers International with both parties expecting $150 million for the combined blocks which now encompass 140-150 Queen Street and 27 McKillop Street, that combined form a 2,500 sqm development site.

Which brings us to the subject of today's article - what is the development potential of this development site in light of the current planning regime and with a Floor Area Ratio (FAR) of 18:1 limiting the height should the new purchaser not act on the Tower Melbourne permit?

Below I've undertaken a quick study to investigate the development potential of the combined sites, with the intent to try and achieve height on the site while being within an allowed planning envelope. For the purposes of the study, I have gone with a residential tower floor to floor height but with a floorplate that could accommodate office use.

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/diagram_01-01.png" rel="gallery-all" title="Tower Melbourne and the site developed with full site coverage. "><img alt="" class="image-article-full-width-580px" height="294" src="/sites/urban.melbourne/files/styles/article_full_width_580px/public/pictures/article-images/diagram_01-01.png?itok=USBl5kOu" title="Tower Melbourne and the site developed with full site coverage. " width="580"></a>

<figcaption>Tower Melbourne and the site developed with full site coverage.</figcaption></figure>Not surprisingly a FAR of 18:1 with full site coverage results in an 18 storey-building of 45,000 sqm GFA - a stark contrast to Tower Melbourne's 71-storeys.

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/diagram_02-01.png" rel="gallery-all" title="Setbacks applied and Public Open Space introduced"><img alt="" class="image-article-full-width-580px" height="294" src="/sites/urban.melbourne/files/styles/article_full_width_580px/public/pictures/article-images/diagram_02-01.png?itok=K1k6Thx5" title="Setbacks applied and Public Open Space introduced" width="580"></a>

<figcaption>Setbacks applied and Public Open Space introduced</figcaption></figure>By applying setbacks above the 40m podium, the height of the tower can increase, resulting in a 28-storey building overall. The introduction of open space, decreases the site coverage allowing for a larger floorplate for the tower without an increase to the GFA. Commercial office space within the podium, combined with the open space as public benefits allow for additional floor area through a Floor Area Uplift (FAU). 

<figure><a class="colorbox colorbox-insert-image" href="https://res.cloudinary.com/dz9xllyip/image/fetch/q_auto:good/https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/diagram_03-01.png" rel="gallery-all" title="Final massing and comparison diagram."><img alt="" class="image-article-full-width-580px" height="294" src="/sites/urban.melbourne/files/styles/article_full_width_580px/public/pictures/article-images/diagram_03-01.png?itok=PNSwa-44" title="Final massing and comparison diagram." width="580"></a>

<figcaption>Final massing and comparison diagram.</figcaption></figure>The resulting building envelope allows that is achieved is based on the following:

<ul>
<li>27-storeys residential + 8-storey commercial podium</li>
	<li>Public Benefits: 1,000 sqm POS @ $15,000/sqm = $15m, 13,000 sqm of office space  </li>
	<li>Residential value of additional floor space within western core: $7,500/sqm</li>
	<li>FAU Value: 7,500 sqm x 10%</li>
	<li>Floor Area Uplift: 20,000 sqm / 17-storeys ($15m ÷ $750) + 1,300sqm office</li>
	<li>Total : 53-storeys / 180m</li>
</ul>
As you can see this is still almost 50m shorter than Tower Melbourne, so for whoever purchases the combined sites, the development potential of 140 Queen Street and 27 McKillop Street is limited if the new owners don't try to revive Tower Melbourne.

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150 Queen Street

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