BMW Australia has put its factory-owned Melbourne dealership property up for sale with plans for a residential redevelopment, but in a twist, will maintain a showroom and concept space to springboard its future mobility strategy.

The Southbank property, at the corner of Southbank Boulevard and City Road and owned by BMW Australia, covers 6000 square metres and could sell for $100 million-plus.

There are plans with the City of Melbourne to redevelop the property with two residential towers, retail and office space and a ground-floor corner location for the BMW showroom.

Architects Fender Katsalidis, who supplied renderings of a proposed development, have designed two towers linked by a sky-bridge. It could have up to 800 apartments, 550 hotel rooms and 10,000 square metres of commercial space.

BMW Australia CEO Marc Werner told GoAutoNews Premium that it was very important to prospective and existing customers that the company have a presence in the city.

His comments are at odds with some other car-makers who have sold their inner-city locations and moved to the suburbs. These include Ford, Mazda and – as announced in this publication last month – Toyota which is selling its Elizabeth Street City Toyota site in Melbourne’s CBD.

“We have deliberately taken the view that we want to stay in the city area where we have corporate customers,” he said.

“We can develop it into a residential tower while still maintaining the bottom floor of the building for our corporate customers and to provide some experience facilities.

“It is not decided if that space would become a cafe or something different. We are quite flexible.

“But it will be designed so people can walk in, enjoy the space, check out the cars and to experience our technology. So it will be a combination of things. It will also be the drop-off point for customer service.”

Mr Werner said though the plans were in place to reduce the dealership’s footprint – down to about 1500 square metres – timing will depend on finding a buyer for the property and approval by the council.

“We expect that the showroom will be operational within five years,” he said.

He said there was no decision made on whether BMW would sell and lease back or maintain its investment.

“That it currently not decided. That is up to the new owner of the site but we are flexible,” he said.

“Ideally we would want to maintain the showroom, not the tower.”

He said the reason for the proposed sale was because the Southbank location was “ideal for residential development” and gives BMW a well-placed location to evolve its mobility strategy.

“There are about 70,000 residents living in the (Southbank) area which as an inner-city area means it is congested,” he said.

“There are so many opportunities that this CBD location opens up to us in the area of mobility solutions and future proof our business.

“If you look at the requirements for urban living and the future for residents, they still need to have flexible mobility solutions.

“The big question is whether they want or need to own a vehicle. Perhaps that just want access to a vehicle.

“So our key strategy is that we want to cater for all people. We want to offer services for customers who want a vehicle and for those who don’t want to own a vehicle.”

But Mr Werner is yet to commit to the ride-share and car-share services. BMW has ReachNow and DriveNow in the US and Europe that are flexible self-drive and pick-up services using BMW and Mini vehicles.

“It remains to be seen,” he said of introducing these to Australia.

“There are so many options that we could explore and ReachNow or DriveNow are only some of the concepts that we are now looking into.”

Servicing of BMW vehicles for Southbank is currently being done out of its facility in Port Melbourne.

Mr Werner said this centre had recently been upgraded – including doubling the number of service bays and hoists – with consideration for a further expansion of the workshop space or moving it elsewhere.

“It may stay there but we have yet to decide,” he said.

“The cost of a service centre close to the city is expensive so we need to find new solutions to accommodate service in a cost-efficient property.

“The plans are that vehicles would be dropped off at Southbank and transferred to the service centre.

“At the end of the day, it has to be convenient for the customer and meet customer expectations for what they expect in a luxury car brand.”

BMW is also readying its second factory-owned dealership with renovations reputed to cost about $52 million.

“This (Sydney) is the largest factory store in Australia and has been in Rushcutters Bay for the past 25 years,” Mr Werner said.

“We have been renovating and upgrading the facility in the past few years and now we have outgrown the building and have embarked on a redevelopment of the site which we expect to be completed at the end of next year.

“This is a lighthouse dealership for BMW and Mini in Australia and it’s in a suburb where you expect to have the best. It will become the benchmark for the BMW network.”

Mr Werner said some of the concepts being discussed for the new Melbourne showroom could be carried over to Sydney, but the development of a residential complex was not possible.

“We cannot extend Rushcutters to include residential properties because of space restrictions,” he said.

By Neil Dowling