Commonwealth Hotel: Ipswich City Council set to spend $5m on extending old CBD pub after already spending $6.2m on restoration

Ipswich City Council has already spent $6.2 million restoring the historic building. A deal is being worked out with a ‘very successful and known’ hotel operator to come on board.

Ipswich City Council is set to spend $5 million on an extension to the rear of the Commonwealth Hotel to accomodate a hotelier.

IPSWICH City Council is set to spend another $5 million on a historic CBD pub, on top of the $6.2 million already spent restoring it, in order to accommodate a “prominent” hotel operator.

The council acquired the 111-year-old Commonwealth Hotel in 2014 but the building was collapsing due to significant issues with its foundations and it was ruled unsafe for occupancy.

The administration has pumped millions into the old pub since then to get it fit for use with restoration works completed in May.

Inside the restored Commonwealth Hotel in the Ipswich CBD.

Upon the recommendations of council officers, members of the Ipswich Central Redevelopment Committee voted unanimously in favour of spending $5 million to extend the hotel, subject to a lease being signed with a long-term tenant.

That decision came ahead of next week’s full council meeting, where it will be confirmed.

Money for the extension will come out of the council’s 2021-22 budget, which will be handed down on June 24.

The council’s acting general manager of infrastructure and environment Sean Madigan said there wasn’t any interest in the market from hotel operators in the current 416 sqm building as it was too small for a modern operation.

The current 813 sqm extension proposal to the rear of the building includes areas for undercover dining and entertainment, with the hotel seen as a key anchor tenant for the wider Nicholas Street Precinct.

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“We have been in extensive negotiations with a prominent hotel operator that has a knowledge of the Ipswich market,” Mr Madigan said.

“They have indicated to us that the extension of the hotel and the community offering that it would provide will actually be really effective in the Ipswich market and be a commercial success.

“What we are looking at effectively is up to a 20-year lease on that particular asset and a return on investment period of approximately 10 years.

“We believe in the very short term we will get an agreement for lease which is a contractually-binding arrangement with an experienced and known hotel operator in the Ipswich market who will take over the operation of the hotel.”

While terms of the deal are confidential, Mr Madigan said the prospective tenant is also proposing to investment between $2-3 million into the old pub.

The council is hopeful it will be up and running by Easter next year.

Ipswich Central Redevelopment Committee chair and councillor Marnie Doyle inside the Commonwealth Hotel.

“This operator believes in the precinct, believes in what we’re trying to achieve with the community and is confident enough to invest a significant amount of their own funds to bring this back to life as a living, breathing and important part of the Ipswich Central redevelopment project,” he said.

Spending about $2 million for a fit-out to accommodate a professional office or small boutique pub was also considered.

Mr Madigan said the current approximate valuation of the council-asset was $8.6 million.

The Queensland Treasury Corporation is working with the council around the ownership and operating model.

If the decision was made to sell it off it would be done so under auction and Mr Madigan said the council was confident it would have “multiple bidders”.

“Do we retain and hold it over the 20-year lease and recoup a significant amount of funds for the ratepayers based on the rental agreement, or hold it for three years and recoup circa $1 million and then sell it?” Mr Madigan said.

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“That's the modelling the QTC will do to inform council.

“We would consider that this would be a very easy asset to divest. You would have a very strong tenant that is there on a very long lease.

“We could recoup that $5 million pretty much within 24 to 24 months if that was the best decision.”

Mr Madigan said a booming Commonwealth Hotel, in the same vein as a cinema operator, was vital to the success of the precinct and would bring people in on weekends and at night.

He said in discussions with retail and food businesses about setting up in the revamped city centre, they stressed the importance of a thriving hotel to their own success.

It is hoped the hotel will be ready to open by Easter next year.

Mr Madigan pointed to the award-winning PA Hotel in Booval as an example of what modern hotels need to offer.

“The community expects a lot more,” he said.

“They want an offering that has entertainment, that has music, that has a good food offering and potentially has gambling opportunities.

“(The PA) is all of those things.

“This very successful and known commercial operator of hotels has said if we want this to succeed as a commercial hotel, a pub, that it needs to provide all of those, which required the footprint to be expanded. Standards are much higher than they used to be.”

Mayor Teresa Harding said the cost of the expansion had been “heavily discussed” in budget briefing sessions in recent months.

“This is something we’ve spent a fair bit of time on,” she said.

Deputy Mayor Nicole Jonic said there was “no other option” to go with in order to secure a significant anchor tenant.

“It’s not a decision that we’ve taken lightly,” she said.

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