Archives October 2018

Lend Lease plans $600m apartment development in Docklands

Lend Lease has submitted plans to build a huge $600 million waterside complex of 1070 apartments in two twin towers at Docklands on a strip of land between Collins Street and the Yarra River.

The towers mark the end of development at Lend Lease’s $4.5 billion Victoria Harbour precinct. Lend Lease won the right to develop the precinct in 2001.

Victoria Harbour is home to a slew of corporate tenants, including ANZ, NAB, Ericsson and Myer, and several other residential buildings housing more than 800 people.

Planning documents show the new complex, to be called Waterside Place, will boast two north and two south towers – the northern towers reaching a maximum height of 90 metres; the southern towers 73 metres. They will sit on 19.5-metre podiums.

One set of towers will be built on a parcel of land between Tom Thumb Lane and Waterside Place and will have 539 apartments. The other set will be built next door on Seafarer Lane and will offer 531 apartments.

Most of the apartments will be a mix of one-bedroom units; one bedroom and a study; or two bedrooms. Each unit will have a balcony big enough for a table and two chairs. The top three levels will have a tapered setback and will be reserved for 56 larger three-bedroom apartments.

Car parking for 748 cars is projected to take up the six floors of the buildings’ podiums.

With the Napthine government in caretaker mode before the November 29 state election, decisions about the new project will be a matter for the new planning minister. Lend Lease had no comment to make about the project.

The 1000-plus apartments would be a huge addition to the 25 years’ worth of apartment housing in the city that has been approved by Planning Minister Matthew Guy.

Last week Lend Lease announced plans for a new $1.5 billion mixed-use project at Batman’s Hill to be called Melbourne Quarter.

Lend Lease secured the development rights at Batman’s Hill two years ago and Mr Guy gave master-plan approval to the project just before the government entered caretaker mode.

On a 2.5-hectare site between Collins and Flinders streets, Melbourne Quarter is situated where one of Melbourne’s founders, John Batman, first built his home.

The new precinct will boast a complex of high- and medium-rise towers offering 110,000 square metres of office space, 4000 square metres of shops and about 800 apartments.

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Melbourne University starts moving on Royal Women’s Hospital site

The former Royal Women’s Hospital in Carlton. Photo: Melanie Faith DoveAfter letting it sit idle for six years, one of the city’s biggest landowners, Melbourne University, has moved to rezone and redevelop the former Royal Women’s Hospital site.

The Carlton-based university has initiated the first stage of a planning scheme change via the City of Melbourne for half a city block bordered by Swanston, Grattan and Cardigan streets to build an “innovation hub” called the Carlton Connect Initiative.

“The university is proposing … to build a sustainability and innovation hub, which will include a mix of research, development and education facilities in addition to community, commercial, residential and retail spaces and student housing,” planning documents say.

The planning amendment, if approved by the new government after this month’s state election, will reclassify the site to “capital city zone”, allowing unlimited height and liberal development constraints similar to Melbourne’s CBD.

The three existing buildings on the site rise up to 47 metres but “as a result of the amendment, the building height of the new development will range from 25 metres to 59 metres”, planning documents state.

Melbourne University has nearly completed refurbishing the A.J. Cunningham Wing of the former hospital on Swanston Street for teaching and research before it ultimately demolishes or adds to it with another structure.

Project director Charlie Day said the size of the development meant completion was likely to be a “decade-long process”.

It would “bring together academia, industry and government research labs”, he said.

Under the Carlton Connect plans, the most prominent building – the 13-storey, brown, brick-and-glass 3AW Community Wing that made up the core of the former women’s hospital – will be refurbished, making up the second stage of a five-stage project.

A third stage will see student housing developed on the north-east portion of the site, while a fourth will see another large building constructed on the corner of Grattan and Cardigan streets. The final stage will demolish the A.J. Cunningham Wing.

The Women’s Hospital moved off the site into a new $250 million building in Flemington Road constructed by Baulderstone in June 2008, which has the capacity for more than 7000 births a year.

The university said Carlton Connect’s research activities will focus on energy, food security, water, cities, climate change, and building more resilient communities through innovation.

Planning amendments can take up to six months to get ministerial approval once public submissions close. Time frames “vary widely”, a council spokeswoman said.

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Georges building sale in Melbourne’s Collins Street moves a step closer

The sale of the Georges building in Collins Street is a step closer with interested parties reduced to a shortlist of four bidders.

Industry sources suggest the building at 168 Collins St will probably sell for about $9 million.

Vendor Michael Drapac put the landmark property on the market as he shifted his focus from his Australian investments to the US. CBRE agents Mark Wizel, Josh Rutman and Justin Dowers have been handling the process.

The property is being sold as a leasehold investment. The lease expires in 2019 but a 20-year option will give control to a new owner until 2039.

The freehold is owned by the Scots Church. If sold outright, the 130-year-old building could have attracted a price tag of as high as $60 million.

It was occupied by the defunct Georges department store from 1889 until 1995 and was Melbourne’s fanciest shopping destination.

British retailer Terence Conran was part of a consortium that tried to revive the Georges name in 1998, pumping $25 million into a renovation.

However, it lasted barely a year. Developer Lang Walker paid $3.5 million for the leasehold in 1999. Mr Drapac bought it in 2006 for $5.8 million and created an arcade of shops on the lower levels.

In that time, Collins Street’s cachet has increased with global luxury brands flocking to the strip. Rents are rising in response.

CBRE agents Zelman Ainsworth and Cam Taranto leased two spaces in the Georges arcade before its listing, registering significant increases.

FashionOnTop has taken one of the two 126-square-metre shops fronting Collins Street, paying $2152 a square metre, according to the building’s marketing documents.

That is a steep 40 per cent rise in rent since July last year, when shoe retailer Dolci Firme renewed its lease, paying $1525 a square metre.

A new lease was also signed for basement restaurant Meatmaiden, which will pay $510 a square metre, nearly 10 per cent more than the Longroom.

“Retailers are looking for alternative luxury spaces and restaurateurs are looking for alternative spaces to Flinders Lane,” Mr Ainsworth said.

Gross rent of $3.72 million is paid by tenants at the Georges building, with advertising firm George Patterson Y&R, which occupies 2775 square metres on levels two and three, paying the most, at $1.34 million a year or $486 a square metre.

Reader’s Feast leases a 892-square-metre shop in the centre of the building, and the Marriner Group and MediaCom take up space on the first floor.

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Melbourne legal elite put chambers on market

The law chambers of some of Melbourne’s top legal minds are set to go on the market.

A syndicate of owners led by prominent barrister Norman O’Bryan SC has listed the 11-storey Melbourne Chambers building on the corner of Queen and Lonsdale streets.

It has price expectations around $25 million.

The building is the working home of a legal who’s who: among others, former Federal Court judge Alan Goldberg QC, noted human rights barrister Ron Merkel QC, the commercial practice of David Denton QC and top tax silk Helen Symon QC.

Mr O’Bryan said the property was owned in a joint venture arrangement and would be sold with a long-term lease in place to retain it as a legal chambers.

“We’re converting our direct ownership of the premises into a long-term leasehold so the business will continue,” he said.

“We haven’t actually fixed the term of the lease but it will be long-term because we want the business to continue. I intend to continue in the chambers.”

The fully refurbished building has no vacancy. It has ground floor tenancies leased to Barristers Logistics, Men’s Suit Warehouse Direct and National Pharmacies.

Barristers’ chambers are usually tightly held and keenly sought after. Fewer buildings have been dedicated to the profession because more properties are picked off for development.

Most chambers are clustered in the narrow geography defined by the location of Melbourne’s main law courts near the intersections of William and Lonsdale streets.

Melbourne developer Albert Dadon purchased Holding Redlich’s prime chambers opposite Flagstaff Gardens in 2006 for $12.8 million and has since converted the property to high-rise apartments.

Maurice Blackburn House at 456 Lonsdale Street was at sold in 2009 for $27 million. It re-traded in 2013 for $37.5 million.

CBRE agents Mark Wizel, Josh Rutman and Ed Wright will handle the sale.

Mr Rutman said low vacancy rates in the immediate precinct around the law courts had driven increases in rentals, especially more desirable and exclusive buildings.

The position and reputation of a building were pivotal factors for barristers choosing a chambers, he said.

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Tony Abbott’s G20: Don’t mention the word ‘inequality’

Someone handed me a document last week.

It was presented at the G20 Sherpa Meeting in Melbourne in June, which was a closed-door meeting.

It hasn’t been published publicly.

It draws on the most up-to-date work of the IMF and OECD, and is titled: “Recent work on income inequality: Macroeconomic implications and policy recommendations.”

This is its opening sentence:

“Rising income inequality is now universally acknowledged as a critical economic, social, and political issue, not confined to a particular group of countries or region.”

A few pages later it explains why the IMF and World Bank are taking rising inequality so seriously these days:

“Inequality matters not only as an ethical and social issue, but also because it can have dramatic macroeconomic consequences … [it] can affect economic growth through several mechanisms; it can undermine progress in health and education, cause investment-reducing political and economic stability, and undercut the social consensus required to adjust in the face of major shocks.”

It says several IMF economists have been arguing that rising inequality in the US intensified the leverage and financial cycle in the lead up to the GFC, sowing the seeds of the crisis.

It says other IMF economists have been stressing “the role of political-economy factors (especially the influence of the rich) in allowing financial excesses to balloon ahead of the crisis”.

It then references the papers in which those arguments are made. All of those papers are publicly available.

The documents then goes on to say that recent empirical research suggests “high dispersion” in income is “particularly likely” to be a brake on economic growth if the incomes of the lower and middle-classes fall behind the rest.

“On average, an increase in income inequality by 1 Gini point lowers yearly GDP per capita growth by around 0.2 percentage points,” the paper says.

“The result tends to be driven by income disparities at the bottom of the distribution, suggesting that the limited opportunities for youth from poor socio-economic backgrounds to invest in their human capital and skills present a drag on growth.”

You get the picture.

The fact that this paper was presented at a G20 Sherpa Meeting this year is significant.

G20 Sherpa meetings are a crucial part of the G20 process because they are top-level meetings of the personal representatives of the heads of state or governments of G20 member countries.

Australia’s G20 Sherpa is Dr Heather Smith. She was appointed G20 Sherpa in the Department of Prime Minister and Cabinet in September 2013.

If she was not at that meeting, she would know what was discussed there.

Hugh Jorgensen, a research associate at the G20 Studies Centre in the Lowy Institute for International Policy, made the point last week that “inequality” has barely rated a mention in official G20 reports while Australia has been in the chair.

“Of the 60-plus official meetings that have taken place under Australia’s 2014 G20 presidency, a grand total of one has managed to produce a final communique or meeting report that mentions the word ‘inequality’. To be fair, it does mention it twice: the 10-11 September declaration of G20 Labour and Employment Ministers first notes that ‘tackling inequality (is a priority) for all our economies’ and then designates it as an issue for future employment working-group discussions,” Mr Jorgensen wrote.

“Yet on a purely public relations basis, the absence of more explicit references to inequality thus far seems to be oddly out of step with global momentum around the issue.”

With the G20 Leaders’ Summit being held this weekend, a slew of reports from groups like ACOSS, Oxfam and the ACTU have tried to bring this issue to the fore.

Oxfam will publish a report on Wednesday called “Turn the Tide: Why the G20 must act on rising inequality,” that shows that since the Australian Government took over the presidency of the G20 in December 2013, the total wealth in the group of 20 nations that comprise the G20 – and which account for 85 per cent of global GDP – increased by US $17 trillion.

But it also shows that the richest 1 per cent of people in the G20 captured US $6.2 trillion of this wealth – 36 per cent of the overall increase.

Why doesn’t the Abbott government want to mention this?

I suspect because it is heading into the meeting with some highly contradictory policies.

On the one hand, it has been promoting the idea that we need to close global tax loopholes so that multinational companies cannot shift untaxed profits overseas so easily.

It should be commended for its efforts here. The OECD argues that inequality will be reduced, both between and within countries, if these tax loopholes are closed.

But on the other hand, according to a draft of the Abbott government’s growth strategy to be submitted to the G20 Leaders’ summit, the government is citing cuts to controversial unemployment benefits as one of the key structural reforms that will increase Australia’s economic activity by 2 per cent.

How will cutting unemployment benefits lead to an increase in economic growth?

That’s one of those “zombie” economic ideas that refuse to die (which John Quiggin wrote about in 2010).

Australia’s top economists have been arguing, ever since the government handed down its first budget, that cutting benefits to the unemployed will make Australia more unequal.

More news from G20 Brisbane 2014

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