The Corkman Irish Pub was built in 1857. Located 2km north of the Melbourne CBD, and opposite the Law Building of Melbourne University, it was favoured by local students.
The property sold in 2014 for $4.8 million with a net income of $82,000 a year. The income was surprisingly low given the sale terms of a nearby Irish Pub in Flemington, which sold for $4.7 million in 2016 and yielded $200,000 net a year.
The 159 year-old pub was protected by ‘heritage overlay’. Heritage overlay is part of the planning system used in Victoria. The Corkman Irish Pub is identified as a building that cannot be altered without a planning permit. Its simple façade was a “good example” of early to mid-Victorian architecture, and so façade protection (down to the external paint scheme) applied to the Corkman.
Despite its history and protection, the building was completely demolished just a few months ago.
How much was the conversion worth to the site owners?
Demolition took place without a permit in October last year. According to The Age in Victoria, It emerged that the site owners had commissioned preliminary sketches from an architecture firm of a 12 storey apartment building at the site, before commissioning the demolition . However, the sketches suggested they were potentially maintaining the façade, which makes the total demolition a bit of a mystery.
The CoreLogic automated valuation model (AVM) for the median unit in Carlton is $383,240. Based on a median value and two apartments on each floor, a 12 storey apartment tower could earn an estimated $9 million in sales, and yield approximately $625,000 per year in gross rent. That’s almost 8 times the rent earned from the Corkman Irish Pub.
Lord Mayor Robert Doyle stated that under the Planning Act, the developers could face planning and building fines of up to $1 million. However, this could be factored into a developer’s cost-benefit analysis.
To ensure the heritage landscape is not defeated by economic incentives, local students and community members are petitioning for complete restoration of the site.
Crowding out Commercial in Melbourne
The attractiveness of residential returns diminish diversity and heritage, threatening the lifestyle that attracts people to Melbourne in the first place. The CoreLogic hedonic index for Melbourne dwellings increased 54.3% since the start of the upswing of the cycle in May 2012.
From 2015, local governments in the Melbourne metropolitan area increased flexibility for developers to build residential buildings through a high portion of mixed and residential zonings.
Graph 1 shows of the number of zoning changes captured in the Melbourne Metropolitan area since the beginning of 2015 by Blockbrief. Over the whole period, mixed use accounted for 55% of re-zoning, which allows any type of building to be erected at the site. A further 21% of land was rezoned for residential use, and just 7% were zoned commercial.
Flexible zonings across Melbourne coincide with apartment and unit projects out-stripping commercial starts across Victoria. CoreLogic data suggests 70% of the residential construction projects moving into construction each quarter were in the Melbourne metropolitan area.
Developers and buyers seem un-phased by the fact that the number of expected unit completions in the next two years represents an uplift of approximately 16% of the entire existing stock .
However, the fate of the not-so-lucky Irish pub in Carlton highlights the need to maintain diversity in the built environment. It is diversity in age and type of buildings that make cities wonderful places to live.
Commercial Research Analyst