“Southbank in limbo”: concern as major developments stall

Sean Car & Jon Fleetwood

Southbank’s local business association has questioned the status of major local developments at Southgate and STH BNK by Beulah, raising concerns over the impact of ongoing delays on the surrounding community.

Yarra River Business Association (YRBA) executive officer Tim Bracher said that after 30 years of rapid development in the precinct “Southbank is in limbo” as the transformation of Southgate and Beulah’s $2 billion project remain at a standstill, with question marks also hanging over the former Exxon Mobil building.

Mr Bracher said the net effect, together with the City of Melbourne’s own delays in revitalising Southbank Promenade, Queensbridge Square, and stage six of Southbank Boulevard, could mean at least another decade of paralysis in the precinct.

The YRBA has led calls for badly needed upgrades to the promenade and Queensbridge Square, including the removal of the “eyesore” red stairs ampitheatre, with Mr Bracher arguing Melbourne’s prime tourist strip had been neglected for too long.

Last month, ESR Australia, which manages Southgate on behalf of Peninsula Investment Partners and Singapore-based Suntec Real Estate Investment Trust, confirmed that it was injecting $4.5 million into upgrading the precinct’s lobby area, which it told Southbank News would begin in July.

This is despite holding a planning approval from the state government since 2021 for a $470 million redevelopment of Southgate, which includes plans for new bars, restaurants, shops, and a 26-storey office building.

In a statement, an ESR spokesperson said, “As an active asset manager working alongside the current owners, ESR Australia has been involved in reviewing the plans for Southgate to ensure any future development caters to the needs of retailers, the local community, and visitors in a commercial market currently under pressure.”

“We have consultants engaged and are working through planning and design of a potential future development which remains subject to several conditions per the approval granted.”

A render of the approved plans to redevelop Southgate. 

Last year, then Lord Mayor Sally Capp described delays with the redevelopment as “really unacceptable” as the council continued to await further information from ESR that would allow it to fully complete upgrades to Southbank Promenade.

The council told Southbank News last month that it was “getting on with the Southbank Promenade upgrade – with funding in this year’s budget for planning, as well as further engagement with the Southbank Traders’ and Residents’ Associations.”

“The upgrade has been coordinated alongside the redevelopment of the Southgate complex – to help minimise disruption for residents and traders,” the spokesperson said. “We want to thank local businesses and the community for their patience while this work progresses.”  

However, the council has only pledged $500,000 in this year’s budget, $250,000 of which has been brought forward from the 2023/24 budget to progress planning for the promenade upgrades, and a further $250,000 for stage six of Southbank Boulevard.

Having spent $3.8 million in 2023 on stage one of upgrading Southbank Promenade between Princes and Evan Walker Bridges, except for the section located out the front of Southgate’s foodcourt, Mr Bracher said this latest funding wouldn’t go very far.

He added that the redevelopment of the neighbouring former Exxon Mobil building, ESSO House, which is currently being demolished, wasn’t expected to begin construction for some years, also leaving stage two of the promenade upgrades to Queensbridge Square up in the air.

As reported in Southbank News, Mr Bracher implored the council in November last year to proceed with the “much-needed refurbishment of the promenade” and then require any developer “to reinstate exactly to the quality and standard”.

“So, in other words, instead of sitting around waiting for the private sector to get their act together, let’s get the public stuff done and then make the private sector pay for any disturbance they need to make on that promenade,” Mr Bracher said.

Southbank Residents’ Association president Tony Penna said Southbank Promenade and Southbank Boulevard were “classic examples of the council dragging its feet.”

“The promenade is one of the main go-to areas for tourists visiting our city, yet it is so tired,” Mr Penna said. “In comparison to other waterside precincts around Australia, it makes us look like a joke.”

Residents living in the adjoining Quay West building, which shares an easement with Southgate, Hamer Hall, and St John’s Southgate church, say they are still awaiting information from ESR regarding potential impacts of any redevelopment.

Works on the neighbouring Melbourne Arts Precinct transformation are also expected to present further challenges for Southgate, fuelling speculation that its owners could be destined for a return to the drawing board given current uncertainty gripping the commercial property market.

Head of asset management at ESR Australia Rob Ewing told Southbank News last year that it had offered leases of three or four years to tenants as part of a $250,000 (phase 1) refurbishment of the food court, which has seen a recent spike in trade.

While new life emerges in the precinct, with franchise San Churro and Mexican restaurant Hacienda both scheduled to open their doors in Southgate later this year, many existing traders remain in limbo, with some engaged in legal disputes.

In June, the Herald Sun reported that restaurant Bluetrain had been in a “long-running legal battle” with Southgate’s owners as it continues to seek “recognition and compensation for loss as a result of [the landlord’s] failure to maintain an adequate and enjoyable trading environment.”

One of the owners of Bluetrain Xavier DiMattina slammed the condition of the precinct, telling the Herald Sun Southgate was “literally falling apart”.

Southbank News also contacted Metropolis director Eddie Muto, who said he was unable to comment on the business’s current situation as it was also engaged in a legal dispute with Southgate’s operators.

Mr Bracher said the ongoing uncertainty surrounding the future of Southgate continued to prove damaging for traders.

“It’s the great unknown of Southbank,” Mr Bracher said.

“It would be nice to have a timeline around Southgate so vendors know when they will have to vacate their businesses. It’s fine if plans are changing, but it’s important Southgate’s owners are upfront with the community about it.”

Meanwhile, Mr Bracher also questioned the timeline surrounding the completion of the nearby STH BNK by Beulah project, which he said had become “hazy”.

The twin-tower development is due to deliver the Southern Hemisphere’s tallest high-rise at the site of the former BMW showroom and Hanover House bordered by City Rd, Southbank Boulevard and Power St.

The developer announced last year that it had appointed Multiplex to complete the build. As Southbank News reported in August, this was expected to take five years, with construction due to start in “late 2023 or early 2024”.

Since the project was originally approved in 2020, Beulah has announced several initiatives as part of its project as well as various activations of its site, namely the repurposing of Hanover House into “BETA” – an arts, cultural and community “testing area”.

Last year, it commissioned an artist to paint a giant mural on top of the former BMW showroom, and more recently it engaged vertical farming business Greenspace to establish a hydroponic macrofarm.

But despite reporting “skyrocketing” sales in November last year, with more than 80 per cent of apartments confirmed to have been sold at the time, the sod remains unturned on the $2 billion mixed-use project.

A spokesperson for Beulah reaffirmed these figures in July, and told Southbank News that demolition was now forecast to begin “in late Q3/early Q4 of this year.”

“Since the project’s launch in 2022, more than 80 per cent of apartments have sold to date,” the Beulah spokesperson said.

The council has previously indicated that completion of stage six of Southbank Boulevard partially hinges on Beulah’s project, however the developer is understood to have made it clear to the council not to hold up delivering its upgrades to the street. •