Victoria has narrowed the field to just four bidders in the race for Melbourne’s Treasury Square urban regeneration project, with developers sharpening pencils for bids that could see them pay more than $500 million for the key CBD-fringe site.
Teams led by Mirvac, Brookfield, Cbus Property and Dexus-John Holland now have until March 12 to produce detailed bids for the 13,600sq m site.
The site, on the southern side of Flinders Street, has the potential to create 130,000 square metres of net lettable area for a commercial value of about $2 billion.
Colliers International managing director of capital markets John Marasco, whose agency is marketing the site, confirmed the shortlist. Transaction manager EY’s team is headed by partner Richard Bowman.
While strong interest in the land that rail utility VicTrack is offloading reflects the dearth of large commercial sites in the Melbourne CBD, the high price the state government wants – after making a $5.2 billion stamp duty write-down in last year’s budget – could limit profitability of the technically tricky project.
“They’re dreaming,” said a person close to one team that did not make the shortlist.
“If they wanted that number…we’ll stand back and leave them to it.”
The tender is due to be awarded this financial year.
The site is above a rail tunnel of Melbourne’s underground loop and has an electricity substation on it.
A deck would need to be built above the site to support the three towers that would likely be built as part of any development, which would also be subject to controls to limit overshadowing of Birrarung Marr public park on the banks of the Yarra River.
The deck alone could cost as much as $150 million, the person said.
The project will play a key role in shaping the heart of the country’s fastest-growing city. The site, which spans the area between Exhibition and Flinders streets, and Wellington Parade South, could create a future link between Spring Street and the city’s parliamentary precinct to the MCG and Melbourne Park sporting precinct.
It could even link to a future Federation Square East redevelopment.
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