The Australia Financial Review
23 May 2023
by Larry Schlesinger
Developer Sterling Global is looking to stamp its mark at the busy western end of Melbourne’s Collins Street after unveiling plans to turn a prime corner site co-owned for decades by pub baron Bruce Mathieson into a $420 million high-rise hotel and apartment tower.
The 42-level project opposite Southern Cross Station will rise above the 100-year-old former State Savings Bank site, on the corner of Collins and Spencer streets – currently operating as the Batman’s Hill on Collins hotel – as part of a development spanning three adjoining sites at 623 Collins Street, 607-613 Collins Street and 66-70 Spencer Street.
Transfer documents show Sterling Global paid $55 million for the three properties, which were owned by entities controlled by Rich Lister Mr Mathieson and the family of Luigi “Lui” Grollo, founder of home builder Grollo Homes. Mr Grollo, who passed away in 2018 is unrelated to the Grollo family of Grocon fame. An additional, undisclosed amount was paid for the hotel business.
Mr Mathieson and the Grollos have controlled the prime, near 2000 sq m corner site, for more than 30 years, having purchased 66-70 Spencer Street for $820,000 in 1985, the former bank building on the corner for $4.05 million at auction in 1989 and the office building at 607-613 Collins Street for $1.65 million in 1999.
In 2005, the Mathiesons and Grollos converted the three properties into a 190-room hotel and then in 2007 amalgamated the three sites under one title.
Sterling Global, whose $1.6 billion project pipeline includes residential projects in South Yarra and Toorak, got the keys to the properties in March and has lodged a planning application with the Victoria Government’s Department of Transport and Planning, and the City of Melbourne.
The proposed 42-level “glass bladed” twin tower designed by Carr Architects will be set back from the heritage podium and have separate entrances for the residential and commercial spaces. It will include 175 one-, two- and three-bedroom residences, eight sub-penthouses and penthouses, above a 229-room hotel and 2735 sq m of commercial space.
Sterling Global plans to restore the heritage facades of the bank building as well as refurbish the existing banking chamber.
Sterling Global director Brandon Yeoh said the site was a “fantastic location” that was best suited to a mixed-use development, which was the “direction the city was moving in”.
Incorporating both hotel rooms and apartments, as well as a food and beverage offering, would ensure the new development would be utilised fully, Mr Yeoh said.
The company will seek out an “upper-scale lifestyle hotel operator” to manage the hotel should the project get the green light.
It will add to the ongoing revitalisation of the Western end of Collins Street, in particular the city blocks on either side of Collins Street between Spencer and King streets.
Projects in this precinct include Charter Hall and GIC’s $800 million premium office development at 555 Collins Street, due for completion in June, and a 46-level premium office tower that US-based real estate investor and landlord Hines will soon start building across the road at 600 Collins Street.
“623 Collins Street completes the revitalisation of the western CBD end of Collins Street with a high quality mixed-use development which will become a landmark destination,” Mr Yeoh said.
Amid a wave of new hotels opening across the city, Mr Yeoh said he was confident there would be a need for more hotel rooms in the Melbourne CBD in the coming years.
“We’ve already surpassed pre-COVID trading levels in March and April this year,” he said.