Capital Gain
The Allen government is offloading an empty legal district office building which is on the market for the first time since the gloomy winter of 1992.
The nine-level art deco building at 436-450 Lonsdale Street was last tested in the market in the dying days of the Kirner government, as part of a larger $90 million portfolio of nine properties.
The sale then would have helped patch some of the holes in the state’s finances, but none of the sale and lease-back properties found buyers. It was a tough time.
Sources suggest the government could get around $25 million for the empty building which was occupied by the Supreme Court for many years. The court moved out in 2021 when urgent fire safety upgrades were identified.
In 2024, the government applied for and received a permit for a 23-storey office tower above a heritage facade.
It’s on a large 1490 square metre site in the heart of the legal district between Queen and William streets, with Lonsdale Lane running down the side.
Savills agents Tom O’Halloran, Tim Grant, Nick Peden and Jamus Campbell have the listing but declined to comment.
Fitzroy office
A Sydney buyer has nabbed an office building in Fitzroy converted by developer-investor Andrew Schwartz, paying $8.6 million.
It’s a good result for the boutique 1011 sq m building at 35 Rose Street, reflecting a yield of 6.1 per cent.
Stonebridge’s Dylan Kilner, who did the deal with Max Warren and Chao Zhang, said it was only the fifth fully leased office building in the city fringe to sell in the past three years. That’s a remarkable metric which speaks volumes about the office market in general, not just the fringe.
Most fringe offices hitting the market have been vacant or partly vacant and have attracted owner-occupiers rather than investors who have not been willing to take the risk. Three formal offers were received, two of them from New South Wales where buyers see value in the flatter Melbourne market.
“Notably, 57 per cent of city-fringe transactions in 2026 have had buyers referred via our Sydney office, reflecting the depth of NSW capital actively seeking exposure to Melbourne’s city-fringe market,” Kilner said.
Schwartz bought the site as an unfinished warehouse conversion in 2019 for $3.04 million.
Brunswick Street
A hospitality operator is understood to be the new owner of a historic Fitzroy pub which sold after auction last week for $6.55 million.
The five-level pub at 125-129 Brunswick Street, was most recently the Ichi Ni Nana Izakaya restaurant and was for sale for $10 million-plus in 2024 when it still had paying tenants.
Records show the pub, built in 1849 before the gold rush, last sold in 2012 for $4.84 million. The buyers in 2012 were the Adamo and Sofo families who then owned the iconic Esplanade Hotel in St Kilda and opened Ichi Ni Nana in 2015.
The 1649 sq m building is opposite the Atherton Gardens housing estate on a large 662 sq m site. It has a coveted 3am liquor licence for 478 patrons. Stonebridge’s Nic Hage, Rorey James and Ian Lam got the deal over the line.
The property passed in on a vendor bid of $6.5 million, with a host of hospitality operators watching with interest, keen to capitalise on the significant existing fitout.
Fitzroy Street
Speaking of St Kilda, publican and former footy player Paul Dimattina has signed a lease on two ground-floor spaces at Fortis’ new project on Fitzroy Street.
Dimattina, who operates South Melbourne’s popular Lamaro’s Hotel, has taken a 12-year lease on two spots where he will run a 180 sq m cafe and a 202 sq m neighbourhood deli. The $131 million mixed-use development at 61-73 Fitzroy Street is expected to open in the first half of 2028.
Hopefully, the deal is another notch on the way to a St Kilda revival. Fortis and fellow developers ERDI and Ondas, who are building on the strip, are spearheading renewal under the banner of the “St Kilda Collective”.
Also in the works is a new venue for the Ganley Group and an expansion of its The Fifth Province pub. Experienced operator Grant Smillie has also taken control of The Prince Hotel.
Queens
Back to the inner north, a local investor snapped up a shop on Queens Parade at auction last week, paying $945,000 for the 120 sq m shop on a sharp yield of 4 per cent. Three bidders fought for the property at 342 Queens Parade, on the north side of the strip.
It has a new lease to knitwear retailer Toorallie, which has traded for many years on the Clifton Hill side of the parade.
Fitzroys agent Lewis Waddell, who handled the auction with Chris Kombi, said: “The buyer is a local who has a strong affiliation with the area – they have lived in the area for a long time and have their own business nearby – and experienced its evolution first-hand.”
The Queens Parade precinct is poised for significant population growth. Down the road, Gurner’s controversial 316-unit project is under construction, as is Prime Edition’s boutique 33-unit building on the old hardware site at 33 Queens Parade.
Around the corner at the top of Smith Street, North Collective – a joint venture between Assemble, Milieu and Hickory – has started work on the 800 units in Parcel B of the Gasworks redevelopment site.
University
The University of Melbourne’s plans for the former Save the Children call centre at 33 Lincoln Square South have been revealed.
After the university bulldozes the gateway John Medley Building, which was designed by Roy Grounds in the late 1960s, arts faculty academics will be parked in the call centre in Lincoln Square. The uni bought the 2965 sq m building from CareSuper late last year for $17.8 million.
According to an email from the office of the dean of arts, the university is planning to move arts academics into this office mid-2027 before rehousing them in the centrally located Raymond Priestly Building.
The Raymond Priestly Building is where the university’s administration and vice chancellor have worked since it was built in 1970. Where will they go?
“The university has estate development plans to accommodate long-term needs alongside the realities of our current operating conditions and current financial situation,” a spokesperson said.
New vice chancellor Carolyn Evans has apparently indicated 2026 will be a relatively quiet year at the university before plans for the future – including budget cuts – ramp up next year. Disclaimer: your correspondent studied in the John Medley Building during the 1980s and 1990s.
The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.
