Luxury tower plan for site at Albert Park

Melbourne's much-loved Albert Park may soon be ringed by apartment developments, after Pace Development Group's purchase of a six-level St Kilda office building.

The 181 Fitzroy Street office at the southern tip of the park was bought by the residential developer this week for $17.15million in a deal negotiated by CBRE's Kiran Pillai and Mark Coster, and Jones Lang LaSalle's James Kaufman and Steven Messina.

Pace intends to redevelop the large glass and concrete building into exclusive St Kilda apartments with sweeping northerly views towards the CBD.

The site has potential for a 10- to 12-level building.

Residential development of Albert Park has almost been fully exploited along its eastern edge where multiple apartments in Queens Road have been completed over the previous three decades. To the north and west are low-lying residential areas.

The building, opposite Junction Oval, was owned and occupied as the headquarters of the Australian Institute of Management for the past 20 years.

"We felt the time was right to relocate to improved premises in the CBD where many of our members and clients are based," AIM chairman Geoff Fary said.

The Pace Group was until recently embroiled in uncertainty over the future of its Evo development in Parkville. The proposed entrance to the east-west link tunnel will surround the apartments with flyovers.

Last week the state government told the 159 people who bought apartments off the plan in Evo that they could sell their purchase contracts and receive compensation from the Linking Melbourne Authority, the government body responsible for the road project.

The authority will also buy 16 apartments not yet sold.

Pace director Shane Wilkinson said the outcome was a good result for buyers.

"No one should be better or worse off due to the east-west link being built," he said.

Some owner occupiers had opted to stay in Evo, he said.

Mr Wilkinson said Pace would demolish the current building on Fitzroy Street and look to build a "high-end product" aimed at owner occupiers.

The building's five levels of office space, ground floor retail, substantial basement car park and street frontages to Fitzroy Street and Pattison Street sold for about $7992 a square metre.

Strong interest from numerous potential buyers generated 200 inquiries and 15 firm offers, Mr Pillai said.