Telstra to sue Collins Street office building owner after falling marble forced tenants out

Telstra is suing the owners of 447 Collins Street after being forced to vacate office space from the building, which shed part of its marble façade in January.

Parts of the Suncorp building remain inaccessible after a two-metre marble panel fell off the building plummeted into the forecourt in late January.

Telstra is seeking nearly $500,000 from Industry Super Property Trust, saying it spent $304,642 on temporary leases and wages for staff unable to work after the telco was forced to move 462 staff out of their offices in the 1960s-built building. Telstra is also claiming an extra $170,000 for the costs it took to speed up the refurbishment of new offices.

Telstra was leasing three levels of the building before access was cut off.  Telstra already had plans to move into a new building in Latrobe Street.

Building owner the Industry Super Property Trust will not be renewing leases, and tenants will be leaving over the next year, with Suncorp the last to leave in mid-2013.

Meanwhile, the ground-floor tenants are still awaiting a final compensation figures from ISPT.

“We just want them to pay out enough to set up another shop, that’s all we want,” one shop owner told Property Observer.

“Every week they pay us a little bit, but they are still deciding on a final figure. But it’s already been a long time.

“We haven’t heard anything from them. They were supposed to call back, but they haven’t.”

Another shop owner gave the same story.

“Everybody is hard-hit, of course. But we still don’t know what’s happening.”

ISPT chief executive Daryl Browning says the company currently plans on keeping the building.

“At this stage the intention is to keep the building,” Browning told Fairfax.

“The floors that are vacated will not be reoccupied because the work that would be needed on the facade is likely to be disruptive to tenants. The certainty is it would be easier to conduct the work with an empty building, whatever the work may be.”

Since 2006 ISPT has had approval to build a Buchan Group-designed 11-storey office block and a two-storey restaurant on the site. The permit was extended in September 2011 and is due to expire in December 2015. However, the building was recommended for heritage protection in July 2011 by Melbourne City Council.

ISPT has contested the decision, arguing “the condition of the existing building means it is not feasible to retain the existing building in its current form”, according to a December Melbourne City Council document.

The inclusion in a heritage overlay would affect future approvals if ISPT were to allow the current approval for plans to lapse.

Blockades remain in place around the building, with 40% of the façade clamped on to prevent more falling. All panels from the Flinders Lane side of the building have been removed.

The blockades still restrict access to the building, effectively stopping any street traffic from entering the ground-floor businesses.

The Godfrey & Spowers-designed building was cordoned off in January after a two-metre-by-one-metre marble panel became dislodged and plummeted into the courtyard – a popular lunchspot for nearby office workers. No one was injured.

The panel, one of a reported 1,200 that coated the building, likely fell due to a combination of age and weather, according to a Melbourne City Council spokesperson.

“The panels are fixed to the building using a combination of mechanical fixings to support the load and an adhesive to keep the panel in position,” the spokesperson told Property Observer at the time.

“It appears that over time the adhesive has permitted sufficient movement so as to allow the panel to move beyond the safe limit of the mechanical support.”

ISPT is one of the largest property funds in Australia, managing $7 billion worth of investments. In Melbourne it owns 500 Bourke Street, Casselden Place, 114 William Street, Melbourne GPO, 474 St Kilda Road and 50 Lonsdale Street.

ISPT bought 447 Collins Street for $81 million from AXA in November 2004.

This article first appeared on Property Observer.