Melbourne to get skinny hotel on laneway site half the size of a tennis court

The boutique hotel’s end value is estimated to be $26 million.

The hotel will have a five-storey brick podium and nine levels above that. Image: Supplied

Melbourne developer Aust Global Investment has applied to the City of Melbourne council to change the land’s use from residential to hotel, while commencing a search for a “small, boutique hotel operator”.

AGI founder Lionel Shi told Commercial Real Estate that the property was approved for an eight-storey residential development when he bought it, but bumped it up to 14 levels after studying the market, before choosing to pursue a hotel on the site.

“We decided commercial development would be a better approach rather than residential; the floorplates are really small, so the maximum (we could have built) would have been two bedders,” he said.

The site is roughly half the size of a tennis court. Photo: Supplied

The other, more personal, reason was that he wanted to keep this “piece of Melbourne” for himself long-term.

“It’s a small site on Bennetts Lane; I want to keep it, I don’t want to sell it and the best way to do that is to leave it as commercial.”

The fate of the site could finally settle once construction begins early next year, after nearly a decade of changed and extended permit applications, council records show.

The owners bought the site for $2.53 million in 2016, Domain Group records show.

The tower will be developed in a small CBD laneway. Photo: Supplied

The hotel will have a jazz club theme, most apparent in the basement bar, in a nod to the former Bennetts Lane Jazz Club, where Prince played two intimate gigs. The club closed in June 2015 to make way for apartments.

“They had just taken down the Bennetts Lane Jazz Club (at the time), so I said ‘why don’t we just build a hotel based on that (culture)?’” Mr Shi said.

The developer did not rule out the possibility of the basement bar becoming a jazz club similar to the famous Bennetts Lane venue.

“We’re trying to have this kind of influence but it depends eventually on the hotel or bar operator downstairs,” he said.

The former Bennetts Lane Jazz Club, which used to be opposite the hotel site, inspired the development. Photo: Supplied

Designed by architecture firms Breathe and Plus, the hotel, which will have graffiti designs and artworks inside, was inspired by the Paramount House Hotel in Sydney’s Surry Hills and Perth’s Alex Hotel.

“They have this (personal) touch but much more modern so that’s what we’re trying to bring to Melbourne. Currently, Melbourne hasn’t got anything like that,” Mr Shi said.

While the Bennetts Lane project is the developer’s first foray into hotels and commercial property in general, Mr Shi already has ambitions for another three boutique hotels in Melbourne.

“The Melbourne market currently has (hotels like) QT, they’re much bigger operations and they’re taking a lot of these (short-stay, single-traveller) clients,” he said.

“(But) a lot of backpackers won’t go for this kind of thing.”