Tiny Melbourne CBD site with planned 34-storey "Manhatten-esque" hotel being sold by developer

Melbourne-based developer BPM Corp is offloading the laneway “Slender Tower” hotel project, with the new owner expected to take possession at the end of 2019 when construction is completed.

Dubbed the Slender Tower, the building will rise up to 34 levels, or 100 metres. Image: Supplied

Ray White Hotels selling agents Andrew Jolliffe and Mark Bullock declined to disclose a price but cited the 291-room Travelodge Docklands as a hotel that has room sizes and facilities similar to the Exploration Lane project. That sold for $107 million to Singaporean investors in 2016.

Mr Bullock said the future building, with 5671 square metres of gross floor area, is a “really good use of a tight site”.

“You could say that it’s Manhatten-esque, you see a lot of those pencil towers in New York,” he said.

“If you look at the landscape in the Melbourne CBD, there’s a lot more of these narrow, skinny towers popping up (in the form of) student accommodation and residential, especially in that north-eastern quadrant of the city.

“Melbourne City Council have been a bit more progressive than other cities in terms of approving similar developments.”

The Slender Tower hotel project (right) is in one of Melbourne’s CBD laneways. Image: Supplied

Hotel facilities will include a lobby on the two basement levels, as well as a gym, dining area, bar and lounge space on levels two and three.

Hotel rooms, measuring an average of 20 square metres, will occupy levels three to 29, with five rooms on each level.

The hotel, designed by architects Elenberg Fraser, has no on-site car park.

BPM will carry out the development, including design and construction.

The 168-square-metre warehouse that stood on the site before it was demolished. Photo: Google Maps

A number of international hotel management companies have expressed interest in managing the property, Mr Bullock said, and the incoming owner can be partnered with these operators. The hotel can also be acquired with vacant possession.

Buyer interest has come from a mix of fund managers and high-net-worth individuals from Australia and Southeast Asia.

“As a major gateway to Australia, the Melbourne hotel market provides an attractive destination for hotel capital supported by strong trading fundamentals,” Mr Jolliffe said.

“As additional supply has entered the Melbourne market over recent years, the city has proven time and again its ability to quickly absorb new stock through increased flight capacity at Melbourne Airport, coupled with an unparalleled key events calendar.”

Mr Bullock said hotel occupancy rates have been in the mid-80 per cent range over the past couple of years.

There are 13,013 reported hotel rooms in Melbourne to be delivered between 2018 and 2025 – the highest number in the country – Tourism Accommodation Australia data shows. About 7000 have been approved.

Among them is the 345-room Holiday Inn Express to be developed by Pro Invest at 35-47 City Road, Southbank – a site which set the developer back $25 million in late 2015.