An artists impression of the Crown Resorts One Queensbridge building. Source: Supplied
James Packer’s Crown Resorts has proposed reorienting a major site in Melbourne where it once planned a $2bn hotel and apartment scheme into a new tower with a major office component.
The move by Crown would keep the hospitality aspect for casino guests and might help get the project off the ground if it can lock in a major corporate tenant in the tough post-coronavirus environment.
Large companies have put office moves on hold during the crisis but there is expected to be a flight to high-quality towers as corporate Australia gets back to work, with the Crown project among the city’s most ambitious.
The One Queensbridge Street site on Melbourne’s Southbank was originally approved to be the country’s tallest tower at 323m with 388 hotel rooms and 700 luxury apartments located opposite the casino.
But the scheme hit a roadblock in early 2019 when the Andrews government turned down a request to delay the start of construction. By late 2019, Crown bought out the private Schiavello Group’s half-stake in the site and pre-development assets for about $80 million.
At the start of the year Packer was talking up a new plan as one of the country’s tallest buildings with a footbridge linking the proposed skyscraper to the casino. In February, Crown said it was assessing options as the “site could accommodate a fourth Crown hotel which would deliver significant economic and tourism benefits to Victoria”.
However, the pandemic has left the Melbourne casino shuttered and international tourism has dried up, and The Australian understands a new development application is being worked up that could include 40,000sq m of office space, one of the city’s largest.
The plan would also include a hotel and small residential component, as pre-selling luxury apartments has become much tougher in the wake of COVID-19. Building the hotel element would allow the company to also refresh its three other Melbourne hotels once it was completed. Despite Crown and then partner Schiavello getting knocked back for a planning extension, the Victorian government would be likely to look favourably on a new scheme as it is desperate to kick-start activity in the CBD and an office block would help create jobs.
Crown told investors that the scheme would still retain top-class hotel elements in the high-rise of the tower, given the importance of this space for its customers.
While the company’s profit fell by 80.2% to $79.5m and it was hit by forced lockdowns of its Melbourne and Perth casinos during the coronavirus pandemic, it reiterated its commitment to the Melbourne project.
Delivering the results, Crown chief executive Ken Barton said the company was looking at “options on what we can do with that property”.
“For us, it’s about a hotel. The question is what else can be economically and sensibly, with minimum level of risk, added to that site beyond a hotel aspect, whether it’s residential or commercial,” he said.
“Those are the things we’re looking at, but for us, it’s about getting a high-quality hotel offering at the east end of the property, and there aren’t going to be many opportunities for us to get an expansion of the property … certainly nothing like the opportunity that comes with Queensbridge,” he said.
The Southbank site would appeal to tenants but would also face stiff competition from property heavyweights Lendlease, Charter Hall, Dexus, Cbus and Mirvac.
Fierce rivalry for tenants in the wake of the coronavirus crisis is likely to drive up incentives but if Crown snared a major pre-commitment it could on-sell the office component, de-risking the project.
