$100 million hit to business during Metro Rail construction

Business acquisitions and disruptions during the construction of Melbourne Metro Rail will cost the CBD nearly $100 million in lost gross value added (GVA).

The environmental effects statement (EES) published by the Metro Rail Authority (MMRA) predicts $60 million losses around CBD North station and $35.5 million around CBD South station.

In the north, the authority says 37 businesses will have to move – affecting 385 jobs, while in the south the numbers are 32 affected businesses with 278 staff.

The MMRA expects that many disrupted businesses will relocate nearby, and is presenting a worst-possible case in its EES.  It also points out that it will bring a hungry construction workforce, which will benefit nearby hospitality outlets.

To the north of LaTrobe St in Swanston St it is acquiring nine commercial property titles.  Near the corner of Swanston and Flinders streets in the south it is potentially acquiring eight commercial property titles.

Chapter 11 of the EES says: “This includes allotments along Swanston St containing retail and fast food outlets and Flinders St (Port Phillip Arcade). At City Square, Brunetti City Square would need to be acquired.  Part of the land owned by the City of Melbourne that is presently occupied by the City Square Car Park is also proposed to be acquired.”

On business disruption more generally, the EES says: “Some businesses would be disrupted temporarily as a result of changed amenity, additional truck movements and disruption to road traffic, tram services and pedestrian traffic.”

“Food and beverage businesses would potentially be the most affected by amenity impacts, especially those with outdoor seating, as well as service businesses where the customer experience is crucial to attracting trade.”

“The potential reduction in amenity is expected to reduce demand for the goods and services sold by businesses in proximity to the construction work, although demand would be redirected to some extent over time to businesses located in surrounding streets and lane ways.”

“Disruptions to tram services and increased truck and construction traffic for the duration of CBD construction works, along with constrained access for pedestrians alongside station entrance construction work sites, would also be expected to reduce access to businesses.”

On City Square businesses, the EES says: “The temporary occupation of City Square would be likely to have a significant impact on businesses that are located within City Square or that have a City Square frontage.”

“Access to these businesses would be highly constrained during construction of CBD South station to the point they may not be viable.”

“A number of businesses operate within City Square or have frontage onto the square including a range of cafes, bars and other retail outlets. The contribution of these businesses to activity within the precinct would be expected to be lost entirely.”

The EES says some businesses may be entitled to compensation under the Land Acquisition and Compensation Act.

“Under the Land Acquisition and Compensation Act 1986, any person with an interest in acquired land is entitled to compensation that not only encompasses land value, but also loss attributable to ‘disturbance’. Such losses typically include the losses associated with business disruption and relocation and any reasonable costs incurred as a result of the compulsory acquisition.”

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