All knocked down and nowhere to go: How COVID brought bombsites back to Melbourne

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Melbourne is likely to get a new park in the heart of the CBD, the first in who knows how long. You haven’t heard about it because it wasn’t planned and if it happens it will be an accident, one of the many surprise impacts of COVID-19.

Only recently superannuation-backed developer Cbus Property was demolishing a building on the corner of Bourke and Queen Streets to make way for a $1 billion office and shopping complex, a new focal point for an already bustling precinct just up from Bourke Street Mall.

A site in Bourke Street where developer Cbus has been forced to stall development due to COVID uncertainty.Credit:Jason South

The central city's economy was humming, offices were almost full and investors, developers and builders were jockeying to build the next CBD workplaces and residential towers.

Then COVID struck.

Now Cbus, one of the city’s biggest developers, is in discussions with the city council about what to do with what nearby residents describe as a "bombsite". A temporary park is now in the mix. How long the corner property could remain as unexpected open space is unclear. Uncertainty is now a big problem for Melbourne’s all-important construction sector.

Across the central city, the pandemic is undermining plans for billions of dollars of projects and raising doubts about whether office and apartment towers already underway will ever be fully occupied in a new socially distanced world.

The situation is reminiscent of what Melbourne faced in the early 1990s when a recession-smashed city suffered from empty office towers and bombsites. Once again Melbourne faces questions about why developers should be allowed to demolish buildings if there are no definite plans for their replacement, and what should be done with the empty sites.

“COVID has put a hold on what the future might entail,” says Cbus chief executive Adrian Pozzo. “We [developers] are all in the same boat.”

But for Victorian government architect Jill Garner, who had been increasingly concerned for the city’s heritage and character as the speed of development accelerated, a pause is not all bad, especially it leads to some development being diverted to the suburbs.

“I wonder if this current situation will take a little of this pressure off a bit so we’ll have some breathing space to remind ourselves of the layering of the city,” she says.

388 Williams Street. All knocked down and nowhere to go.Credit:Chris Hopkins

On William Street

Shesh Ghale arrived in Melbourne from Nepal in the mid-1990s when the city was still reeling from recession, pockmarked with bombsites but on the cusp of major change. The education entrepreneur and developer went on to amass a fortune from Melbourne’s transformation from a tired 9-to-5 office precinct to a bustling home to 180,000 people and a favoured destination of foreign students and tourists.

Now with our borders closed his Melbourne Institute of Technology is short of students and he possesses a bombsite of his own. Ghale’s MIT Holdings demolished an old car park on the corner of William and Franklin Streets near Queen Victoria Market to make way for a $500 million office and hotel project at 388 Williams Street.

He was confident of signing up a big, long-term tenant to allow construction work to begin in January. He now says the project could be delayed by 18 months or longer. “It's a temporary pause and I'm choosing my own time now and going slow,’ he tells The Age.

Shesh Ghale, CEO of of development company MIT Holdings inside his stalled development at 388 William Street.Credit:Chris Hopkins

Curiously Ghale says he is under no obligation from the government or city council to beautify or activate the site. He only has to “secure the site and keep it safe”.

Like Cbus, Ghale's plans have been derailed by potential tenants pausing to rethink what their businesses and operations will look like post-COVID.

Cranes on the horizon

More than any other Australian city, Melbourne has become reliant on booming immigration and population to drive the all-important education, property and construction sectors. Border closures have denied the city of the very thing that animates it – more people. The long lockdown has deepened the damage.

On the city's skyline the construction industry has continued work, receiving special exemptions to the lockdown rules in recognition of its centrality to the economy. But even construction has slowed in the central city.

Former Labor premier John Cain was renowned for celebrating Victoria's economic health by inviting doubters to "count the cranes on the horizon". In recent years there had been many but their numbers have been dwindling as a construction boom slowed as new projects failed to materialise at the rate they have been finishing.

Consultancy firm Rider Levett Bucknall is the creator of the Crane Index, which counts cranes to measure the strength of the construction sector. Melbourne’s crane count has been falling for more than a year and the trend has continued since COVID.

The lack of new starts is in part due to economic impacts of COVID including the dramatic downturn in immigration, population and foot traffic in the city. But both businesses and governments are also having to assess how the ongoing health concerns of their workers and social distancing in workplaces will affect their own plans for new offices.

As The Age has reported in recent days, the success of the directive to work from home could have long-term ramifications for the shape of the city, with senior government figures and banks coming to accept that employees will not be returning to the city in anything like pre-COVID numbers.

Developers face the problem that potential government and corporate tenants may need some months or even years to review their space requirements.

“It’s bloody difficult for potential tenants to make decisions just now,” says Pozzo. Cbus had hoped to start work on the Bourke Street property early in 2021.

He remains hopeful of a late 2021 start.

Cranes still dot the skyline, but the pace of new development has slowed because of COVID.Credit:Jason South

Like the 1990s, residents and planners have queried why developers should be able to demolish existing buildings if they have no definite plan for construction. And like the 1990s also we now have to decide what to do with empty spaces in the city.

Julie Taylor is a resident near the Cbus Bourke Street site. "It would be an ideal place to put down grass, plant trees and have some food trucks in there, especially if they're trying to encourage outdoor dining because of COVID," she says.

But government architect Jill Garner says she is not keen on “pop ups” and, anyway, a slowing of development in the CBD is an opportunity to think about what is important for the city including protection of heritage and rich fabric.

“It doesn’t worry me if it takes the pressure off the Hoddle grid in some ways. This might give us breathing space.”

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