VicRoads HQ to become units as housing crisis bites

The distinctive former VicRoads headquarters site in Melbourne’s Kew is destined for a new life as high end apartments.

The former Vic Roads buildings in Kew. Picture: NewsWire/Ian Currie

State-owned Development Victoria is offering the former Vic­Roads headquarters site in the up-market Melbourne suburb of Kew as a redevelopment play, with industry estimates that it could sustain a $500m mixed-use project.

The agency has launched an expressions of interest campaign for 60 Denmark Street, billing it as an opportunity to transform the prime inner-eastern landholding into a medium and high-density development.

The site could accommodate about 500 homes overall, with a minimum requirement of 10 per cent affordable housing. Development Victoria is seeking interest from experienced developers to speed the delivery of housing supply in the well-connected inner-Melbourne precinct.

JLL’s Josh Rutman and Jesse Radisich are handling a preliminary process closing in mid-May, and after this short-listed bidders will be invited to a request for proposal process.

Industry sources suggested a mix of listed, private and offshore developers will chase the site due to its premium location and the shortage of new apartment buildings in the area.

A scheme would probably be a mix of private apartments, some affordable stock and even a build-to-rent component. Relatively few premium residential development sites have traded in Melbourne, partly as the CBD and city fringe sites that have come up have not been suited to higher-end projects.

But the premium nature of the Kew site is likely to bring out big players and could set a benchmark for the area. Prevailing land rates for 10-level projects in the area have been about $10,000 per square metre.

There are three parcels comprising 8268sq m, 5757sq m and 5850sq m that are available. Another parcel is being kept by Development Victoria. That will be the subject of further investigation to determine whether the existing office tower can be converted into residential dwellings.

Developers have been invited to bid to acquire, fund and develop the three parcels individually and have the option to offer a bundled parcels bid, excluding the Development Victoria retained parcel.

The retained site is being investigated for an adaptive reuse project to convert the existing office tower into between 100 and 130 residential dwellings. The agency is planning to develop these units but may also sell off that parcel in future.