Calls for controversial Melbourne CBD carpark sale to be canned

A leading business group has said reported plans for the City of Melbourne to sell a valuable carpark to a Sydney pub giant at a knockdown price is a “perplexing decision” and should be scrapped.

The City of Melbourne should scrap any plans to sell the carpark at 34-60 Little Collins St for as little as 50c on the dollar, according to business leaders.

As The Sunday Herald Sun first revealed, extensive negotiations are reportedly under way for hospitality titan Justin Hemmes, head of Merrivale Group, to buy the site for as little as $52m.

The market value for the property, otherwise known as The Parkade Building, is estimated to be upwards of $100m.

Victorian Chamber of Commerce and Industry chief executive Paul Guerra slammed the sale as “perplexing” and called for it to be postponed until a better price could be obtained.

“Businesses pay significant rates to the City of Melbourne and expect it to operate in a fiscally sound manner,” Mr Guerra said.

34-60 Little Collins St property has been marked as ‘exclusively under offer’, with Merivale Group boss Justin Hemmes believed to have been the frontrunner.

“It is a perplexing decision to sell such a significant, and strategically important, capital asset in the current market, especially when there is a decade to go on the current lease.

“As the custodians of the City’s finances, the Council should postpone any plans to sell this site.”

Merrivale Group’s plans to open another Melbourne venue in Flinders Lane have repeatedly stalled, potentially costing the group up to $100m.

Mr Guerra called for greater transparency when it came to the sale of City of Melbourne assets, with all parties involved refusing to comment.

Justin Hemmes’ Merrivale Group owns 79 venues, including the Ivy Pool Club in Sydney. Picture: Richard Dobson

“The sale of council owned assets should be transparent and subject to the appropriate governance and scrutiny,” he said.

Selling agents JLL advertised 34-60 Little Collins St as “the last major development opportunity” in Melbourne’s highly desirable East End.

The existing lease on the property is held by real estate investment trust Dexus and does not end for 13 years, which is one possible reason for the City considering such a low offer.

Any agreement to terminate that lease early would have to be agreed upon by Dexus and the prospective purchaser.

Victorian Chamber of Commerce and Industry Chief Executive Paul Guerra called for the sale to be postponed until a better offer was on the table.

However, industry insiders said they would have also expected 34-60 Little Collins St to sell for about $100m, with a going rate of about $30,000 a square metre for buildings in the area, even with the caveat of the existing lease.

First Parking operates a car park in the building with 940 spaces in a part of the CBD severely lacking in other parking options.

The City of Melbourne put The Parkade up for sale in May.

A City of Melbourne spokesman refused to comment on the sale, but The Saturday Herald Sun understands there is likely to be progress before the end of the year.

The final sale will be voted on by Melbourne councillors led by newly elected Lord Mayor Nick Reece.