Rialto Tower co-owner Lorenz Grollo has taken complete control of the notorious King Street nightclub strip adjacent to Melbourne's most famous office building after buying the premises of late-night venue Inflation Nightclub.
Grollo Group and its Rialto joint-venture partner, the Kuwaiti government-backed St Martins Properties, acquired the two-storey nightclub at 54-60 King Street from strip club owner Peter Iwaniuk in an off-market deal.
With this deal, the JV partners now own all the King Street properties running from Collins Street to Flinders Lane, a 1500sq m pocket that neighbours the 6800sq m Rialto precinct and which includes the recently completed Collins Street retail and office development, part of a major regeneration of the 251-metre high skyscraper.
Mr Grollo told The Australian Financial Review he had appointed architects Woods Bagot to come up with a master plan for the "King Street Precinct".
"We're looking at activating the whole precinct with restaurants, possibly a jazz bar and a hotel on top," he said.
Mr Grollo said the owner of Inflation Nightclub, Martha Tsamis, had a lease over the property, but "we are working with them to get them to move out".
He declined to reveal what the Rialto Tower partners paid for the property. It's likely to be in excess of the $13.25 million they paid for the neighbouring former Showgirls Bar 20 at 46 King Street acquired in 2016, given its on a slightly bigger footprint and has no heritage restrictions.
Alongside these two properties, the Rialto Tower partners have long held the York Butter Factory building at 62-66 King Street. They bought the premises of Rare Steakhouse at 42-44 King Street for $2.9 million in 2006.
The nightclub, which has operated from the King Street premises since 1979, was the scene of a recent shooting and numerous drug raids and unsavoury incidents over the years.
Mr Grollo has described cleaning up King Street as a "key imperative" as the commercial heart of Melbourne moves west down Collins Street towards Docklands, riding a wave of landmark office, hotel and residential developments.
These include Mirvac's $828 million Olderfleet office project at 477 Collins Street and Cbus Properties' $1 billion-plus Collins Arch mixed-use development covering a whole city block at 447 Collins Street.
Across the road from the Rialto at 555 Collins Street, Singapore's Fragrance Group will demolish an ugly 1970s-built office building to make way for a 302-metre residential tower.
Rialto Tower's new retail and office precinct includes the countrys' first Mercedes Me cafe, the Bank of Melbourne and outfitter MJ Bale as well as 6000sq m of office space.
High-end Italian kitchen seller Officine Gullo will open its first Australian store at Rialto Tower in a Collins Street-fronting store in June while Regus-owned flexible working provider Spaces will open a new co-working hub later in the year.