By Cara Waters
More than 80 unoccupied and underused office buildings in Melbourne’s CBD have been identified as prime candidates for redevelopment into more than 10,000 new homes.
A property audit of the city centre, conducted by the design studio Hassell and planning consultancy Ethos Urban for the Property Council of Australia, listed 86 buildings in Melbourne as “really ripe for adaptive re-use”.
Ingrid Bakker from design studio Hassell in front of 85 Spring Street, an unoccupied building identified as suitable for conversion to housing.Credit: Justin McManus
“If we only converted half of those, we could supply around 10,000 to 12,000 new homes, and each repurposed building would use roughly half the upfront embodied carbon compared to knocking existing buildings down and rebuilding,” said Ingrid Bakker, principal at Hassell.
The audit, which was presented at a Property Council event this week, highlighted both the challenge and opportunity facing Melbourne: addressing the worsening housing crisis while also planning for a changing city. Homes Victoria data published in April showed there were 57,672 families on a waiting list seeking housing in December.
The demand for office space in Melbourne’s CBD has remained weak since the COVID-19 pandemic, with property giant GPT’s latest results reporting a vacancy rate of 16.2 per cent in Melbourne.
Bakker pointed to City of Melbourne census data from 2021 that identified 1.4 million square metres of unoccupied office space. While some of this space had since been occupied, she said it was likely there would be even more unoccupied buildings if that data was collected again.
One of the buildings identified in the audit is 85 Spring Street. To identify buildings considered suitable for redevelopment, the audit focused on those constructed before 1990.
“Buildings built before 1990 are more likely to not be A-grade or premium, and more likely to be unoccupied,” Bakker said.
These buildings were also more likely to need a significant upgrade, she said, as a lot of their services were at the end of their life. The buildings are also likely to have additional storeys added.
The audit found 1323 buildings fit the criteria, so the firms narrowed the parameters to buildings of 10 storeys or more.
“If we want to really benefit from the carbon savings, we need a certain scale and critical mass to do that,” Bakker said. “These buildings are more likely to have structural capacity to allow for additional levels.”
There were 138 buildings that fit that bill, so the audit narrowed its parameters further to only include those that were about 20 to 25 metres wide.
“We wanted to make sure that the apartments that we were talking about creating here are going to be of high quality and therefore fully comply with the better apartment design standards that we have that govern the quality of our apartment design,” Bakker said.
“The magic number here is that nine metres’ depth from window to the rear wall in the living space.”
Bakker said the 86 buildings identified as suitable for conversion to residential towers comprised only 6.5 per cent of all the office buildings built before 1990.
“We’re not saying every office building in the city can be converted into residential, but there are some that definitely can – and we’re trying to demonstrate how,” she said.
There are a number of hurdles to overcome with residential conversions, including planning, heritage, location and design issues, and getting the building owners onside.
Bakker said the audit aimed to identify only buildings with the potential for conversion.
“If anyone is working in one of these buildings it’s not going to be converted into a home tomorrow,” she said. “Please don’t stress out.”
One of the buildings identified in the audit, 85 Spring Street, recently sold for $130 million after sitting empty for years.
However, its new owner, developer Ross Pelligra, said he was refurbishing the building to lease out as office space rather than residential.
“I don’t need to convert it to residential to make it work for me,” he said. “If we remove a lot of the office space out of the CBD and convert it to residential, where are people going to work?”
Health fund Australian Unity recently redeveloped a St Kilda Road office block into two retirement and aged care buildings, The Alba and The Grace.
Australian Unity development and fund services general manager Chris Harper said at $6300 a square metre, the redevelopment cost was cheaper than knocking the building down, which was estimated at $6700 a square metre.
“What we’ve done is go from pretty old, tired, of-its-time 1970s office building to continuing care village with aged care, retirement and assisted living,” he said.
Harper said retaining it as an office building would have been “half the cost”, but Australian Unity had adopted a long-term view that considered the environmental, community and social values of the redevelopment.
Cath Evans, the Victorian executive director at the Property Council of Australia, said the “post-pandemic reality” posed many challenges for the Melbourne CBD and the future of older commercial buildings.
“This transformative period, defined by strong demand for premium office space, has resulted in a lot of sub-prime office space being severely underutilised,” she said.
“With innovative planning, building and tax policy changes, the industry will have more ability to make these building conversion projects a much-needed reality.”
Get the day’s breaking news, entertainment ideas and a long read to enjoy. Sign up to receive our Evening Edition newsletter here.