Time's up for a confounding site
It's the prime CBD retail centre that shoppers forgot.
Launched with great fanfare in 2007, The Foundry has become an empty shell sitting on the edge of the busiest shopping precinct in the city, Bourke Street Mall.
It's main entrance is closed, sealed off after the last tenants fled the three-storey arcade that once promised to be a "sophisticated environment" delivering "a new standard of convenience and service retail" linking Bourke and Little Collins streets, according to advertising materials.
The Foundry's original developer and operator, 83 East Pty Ltd, is in liquidation after running up debts of more than $17 million and becoming embroiled in a series of lawsuits related to the project. Private equity group Brookfield Australia, which has owned the centre since 2008, has preferred to shutter it ahead of redevelopment rather than try to make it a going concern.
"It's a bit of an embarrassment that there is all that space available for retail that isn't being used," an industry source said. "But the complex was badly designed and configured from the start and has had no end of problems."
Developer Donnelly Group, using the entity 83 East, bought the site for $17.13 million in 2003, which comprised the heritage-listed John Danks Building at 399 Bourke Street with a second street frontage on Little Collins Street.
The $47 million mixed-use project included 92 apartments, a 6200-square-metre retail arcade spread over three levels, and a multistorey underground car park.
Opened in mid-2007, The Foundry was billed as a "unique new shopping, cafe and residential experience" that would offer a diverse range of 40 boutique-style shops and "best practice" eateries.
But court documents show the complex was beset with problems from the start, including a near total vacancy rate that 83 East concealed from prospective tenants in a bid to secure lease deals.
One of only three shops occupied at its launch, the Jamaica Blue cafe, closed within three months with losses estimated at nearly $400,000.
The Foundry was cold, "dark and gloomy", contaminated by dust, the escalators often didn't work, and there were no accessible customer toilets, the County Court heard in a 2010 lawsuit brought by the cafe's former operators against 83 East.
"There was virtually no pedestrian activity, either by reason of customers coming to deal with businesses in the Foundry, or by reason of the so-called "ant trail" [a new retail thoroughfare created between Bourke and Little Collins streets]," the judge found.
"Quite apart from there being no businesses in operation, there were no leases of all but a handful of shop premises in the Foundry and no prospective tenants for the shop premises that were unlet."
83 East, which was struggling under mounting debt and funding problems, put the site to market in 2008 at a speculated $140 million.
Japanese fund manager daVinci Advisors and Multiplex Developments, a subsidiary of Brookfield Australia, bought the property in 2008 for $87 million, along with an adjacent building at 405 Bourke Street. The joint venture's plan to build a $620 million office development was never implemented and Brookfield bought out daVinci in 2010.
In the meantime, businesses progressively abandoned The Foundry, including anchor tenant IGA. Apart from the car park operator, the last tenant is believed to have departed in early 2013.
Earlier this year, Planning Minister Matthew Guy granted approval to clear part of the site to build a 39-storey tower with 60,000 sq m of office space and 3700 sq m of retail.
Brookfield Australia said no date had been set for construction to begin. "Discussions are ongoing with several large tenant groups to anchor the development," a spokeswoman said.
But the prospect of future progress is little consolation to Matthew Kozik, operator of Eternal Addiction Tattoos. His shop's only frontage is on what was supposed to be the busy retail concourse cutting through The Foundry.
"It's been ridiculous," Mr Kozik said. "There are supposed to be a lot of plans for this place, but we haven't been told anything."