This article is from the Australian Property Journal archive
BUILD-to-rent developers are expected to show interest in a historic bakery site on the edge of Melbourne’s CBD that has hit the market with a permit for a 20-storey mixed use development.
The Dalston House site is on a significant 1,683 sqm land parcel at 405-421 Spencer Street, on the north west tip of the city, at the intersection of Batman with additional frontage to Middleton Place, and close to Flagstaff Gardens and Queen Victoria Market.
Plus Architecture-designed plans for the site allows for 12,142 sqm of building area.
Colliers agents Oliver Hay, Jozef Dickinson and Leon Ma have the listing in conjunction with Jones Real Estate’s Paul Jones and Luke Peric.
“There aren’t any opportunities like this available in today’s market, which presents a rare, and truly once in a lifetime opportunity to purchase a site that has already done the hard work for you,” Jones said.
Dalston’s Bakery was built in 1906 and the site is currently home to an Edwardian corner shop and residence above and the large former bakery warehouse behind it. A planning application put forward for the site in 2016 was objected to by Melbourne Heritage Action, which said the proposal should be more sympathetic. Developer Paul Loftis bought the site soon after for $12.75 million and gained approval for the tower.
Wide interest from traditional apartment developers and the fast-growing market is expected, and interest from other alternate use developers given the site’s proximity to Melbourne and RMIT universities.
“If you look at the activity of build-to-rent in Melbourne, there is a clear trend within Melbourne’s popular city fringe,” Dickinson said.
“Areas such as Kensington, North Melbourne and South Melbourne have become some of Australia’s most active BTR precincts. Dalston House fits this model perfectly.” Major developer Mirvac has a project overlooking the Queen Victoria Market under construction.
Any development of the Dalston House site would represent another step along the gentrification path for the once-industrial suburb. Its population more than doubled in the 10 years to 2021, and is expected to do so again by 2036, although it remains without a pharmacist or dry cleaner. Major developments have included Trenerry Property’s West End apartment complex that opened in 2020 and is now home to about 1,000 people, while Perri Projects is planning a $700 million master planned urban renewal project on the Maribyrnong River side of the suburb.
The state government approved the West Melbourne Structure Plan earlier this year to promote further development.
Just a few doors down from the Dalston House site is the old Sands & McDougall building, one of three adjoining properties sold off in 2020 by property identities Frank Palazzo, Ozzie Kheir and Phil Mehrten for $55 million. Approval for a 23 level hotel and office project was secured for the combined site, but the owners opted to offer the properties for sale individually or separately. Avari Capital Partners bought the Sands and McDougall building for $38.5 million with intentions to refurbish and lease as offices, while the old warehouse site at 102-108 Jeffcott Street sold to Blue Earth Group for $9.5 million, which secured approval earlier this year from the state planning department for a 24-level residential tower with 108 units and a cinema and games room.
A block over, the corner site home to kitsch theatre restaurant Witches in Britches overlooking the Flagstaff Gardens has also just hit the market. The 1,050 sqm building is home to the dinner theatre operator on a lease until January 2024 with an option that brings $243,203 in yearly rent. More than $6 million is expected for the 742 sqm parcel.
Expressions of interest for the Dalston House property close 16th November.
