Southgate business owners unleash as city complex left in ‘serious state of disrepair’

A shopping complex opposite Flinders Street Station was once a “must-visit tourist destination” but business owners have been left fuming, alleging the centre is now “literally falling apart”.

Southgate business owners, including Xavier Dimattina, have been left fuming that the complex has fallen into a “serious state of disrepair”. Picture: Jason Edwards

A lifeless, rundown restaurant and retail complex opposite one of Melbourne’s most iconic landmarks has fallen into such a “serious state of disrepair” that some business owners say they regularly have to deal with water damage, foul smells and rodents.

Southgate, located along the Yarra River opposite Flinders Street Station, was once a “must-visit tourist destination” but workers at the three-level complex say it is now a “ghost town” that struggles to attract enough customers.

A long-running legal battle between much-loved business Bluetrain and the owners of Southgate has laid bare the dismal state of the complex.

Bluetrain has called Southgate home since 1993, with the restaurant relocating from the second to the third level twelve years ago.

Xavier DiMattina, one of the owners of Bluetrain, is in a legal battle with his landlord over the state of Southgate. Picture: Jason Edwards

One of the owners of Bluetrain, Xavier DiMattina, told the Sunday Herald Sun his business has for years been charged “excessively” for upkeep of the complex, which he claimed has “clearly not occurred”.

He said Southgate was “literally falling apart”, describing the moment in March that a loose plank of timber broke off a wall and fell about 10 metres, landing near the escalators. Luckily, no one was injured.

Mr DiMattina said the central heating and cooling was also inadequate, with the temperature in the restaurant last week a chilly 13 degrees.

A witches hat has sat in Southgate at a leak-prone spot for three years, according to one worker. Picture: Jason Edwards

Leaks were so common, he added, the ceiling of Bluetrain’s function room was in February left structurally compromised due to water damage.

“It is very sad … that tenants can be treated with such little regard … and a once thriving and attractive complex has now fallen into a serious state of disrepair,” Mr DiMattina said.

One Southgate worker revealed that one particular witches hat — positioned in a spot prone to leaking — has been there for years.

“Longest standing witches hat ever,” she remarked.

Southgate shopping complex has become a ghost town. Picture: Jason Edwards

A business owner of another restaurant, who did not wish to be named, said he has spent his own money to exterminate mice that plague the centre.

“We spend $300 on pest control every month,” he said.

He added that most weeks a disgusting smell would waft through sections of the centre, which he blamed on faulty pipes.

A young worker in the Southgate food court also spoke of finding rodents around the ground floor, but said they were not the only animals causing headaches.

Bird droppings accumulate on roof installations at Southgate. Picture: Jason Edwards

Birds fly through the entrance and sit on the rafters, leaving droppings in places the cleaners cannot reach, meaning it accumulates instead.

According to VCAT documents, Bluetrain – who seek damages in the vicinity of $2m – allege the landlord has allowed the complex to “fall into disrepair”.

“Bluetrain is seeking recognition and compensation for loss as a result of (the landlord’s) failure to maintain an adequate and enjoyable trading environment,” Mr DiMattina said.

The allegations are disputed though, with the landlord claiming Bluetrain owes in excess of $400,000 for failing to pay for operating expenses – that Bluetrain argues are excessive.

If the parties cannot settle the matter at meditation, they are expected to face off at trial.

But in a small win, Southgate – managed by asset manager ESR Australia on behalf of Suntec and ARA Private Funds – has confirmed a $4.5m upgrade to the lobby area. Work is expected to commence in July 2024.

Numerous businesses have vacated the complex in recent months. Picture: Jason Edwards

Several businesses have vacated the complex in recent months, including JB Hi-Fi, but new tenants are moving in, most notably San Churro.

According to a Herald Sun analysis, approximately 30 per cent of the tenancies are vacant.

In December 2021, the state government approved a $470m redevelopment of the complex, which would see the partial demolition of the site to make way for a five-storey building and 26-storey office tower.

But progress appears to have stalled, with rumours tenants have been offered five-year leases.

Southbank has become a foul-smelling, decaying ‘ghost town’ according to some business owners. Picture: Jason Edwards

An ESR Australia spokeswoman said: “We are working through planning and design of a potential future development which remains subject to several conditions per the approval granted.”

Victorian Chamber of Commerce and Industry acting chief executive Scott Veenker said Southgate had long-enjoyed a reputation for “world-class dining, entertainment and shopping”.

“To keep this reputation, we must always be looking for ways to reinvigorate and reimagine ways to attract customers and keep businesses viable,” he said.

The ESR Australia spokeswoman said it remains “committed” to supporting Southgate retailers and “making it a welcome and vibrant hub for retailers and customers”.

“We take the safety and wellbeing of our tenants and customers seriously,” she said.