Invicta House rebirth proves recipe for heritage success

Speaking with The Urban Developer, "it is possible," says Ian Briggs, Director, Plus Studio.

The transformation of a century-old Melbourne building—from silk merchant to police station, backpackers' accommodation to premium commercial space—proves his point. The successful conversion of Invicta House demonstrates how heritage buildings can deliver viable returns when developers combine careful planning with experienced design teams and flexible funding structures

ST Real Estate (STRE) completed the $30-million redevelopment of the eight-storey building at 226 Flinders Lane in May, creating more than 5000sqm of net leasable area after adding two floors to the heritage structure. The project aligns with the City of Melbourne's Retrofit Melbourne initiative and Adaptive Reuse for Office Buildings guidelines

"Retrofitting and revitalising buildings in the CBD is a win-win for everyone that maintains heritage streetscapes while adding premium commercial space".

Location was fundamental to the project's viability. STRE managing director Patrick Lardi says the building "ticks all the boxes on location". He tells The Urban Developer that the site has major infrastructure projects coming along, the station was already there, and "it's in a good spot in the middle of the CBD, very close to Collins but not on Collins". He adds, "And it's on Flinders Lane, which is quite famous in Melbourne and beyond". Being so close to the future Town Hall Station creates significant tenant value, allowing businesses to secure prime CBD location advantages while avoiding the higher rents commanded by Collins Street.

STRE acquired the property, completed in 1926, for $37 million in 2021. This was after initially losing out to Swinburne University in 2018 when the university outbid them with $44 million against STRE's $42 million offer. When Swinburne's plans changed and the property returned to the market during the pandemic, STRE secured it for $5 million less than its original unsuccessful bid. "I think it was probably one of the best buys I made," Lardi says. He added that he had already moved on and had his heritage building project in Melbourne, so he could stick to his target price on 226.

The $30-million investment reveals the cost realities of heritage projects. Lardi estimates that heritage preservation work, including reinstalling original mouldings and structural compliance upgrades, took about a third of the budget. Base building services and premium fit-outs each accounted for another third.

Briggs approached the project by recognising that the accumulated layers from the building's 100-year history required careful editing rather than wholesale preservation. Briggs tells The Urban Developer that "the process was actually reinstating rather than restoring lost heritage wherever possible". He says that this is a broader challenge for any refurbishment of old buildings, "maintaining the quality and uniqueness that a period building has while bringing it up to code". "From day one, you start changing the building to bring it up to code but also try to take it back at the same time," he says.

Private credit funding through Zagga proved essential when traditional bank lending struggled to justify heritage building complexities. Zagga director Tom Cranfield says the location, infrastructure, and experienced team made the decision attractive. Cranfield tells The Urban Developer that Zagga was "supportive of the concept of activating buildings through adaptive reuse". He says, "A big reason why we were able to support their strategy is because they are a big group with lots of experience, assets, and capability". One of the attractions for Zagga was "the future of Town Hall Station on Swanston Street". The funding structure required a higher equity contribution and contingencies than typical developments, but it enabled STRE to complete fit-outs before leasing, allowing tenants to experience finished spaces rather than construction sites.

The building's heritage constraints became selling points. The four-metre ceiling heights exceed typical modern developments. The central lightwell and bay windows maximise natural light penetration, targeting the sub-1000sqm floor plate market, where tenants increasingly seek completed fit-out spaces.

Central to the building is a sculptural staircase inspired by the site's silk trading history. Briggs designed the fluid structure to reference "the rolls of raw silk once traded from this site" while providing practical access to three separate entrances.

"On one level it's a big showy statement, but at another level it has deep roots to the building specifically. It's not just an architectural flourish I've dreamed up—it's a meaningful addition that talks to its past and to the future while addressing really technical issues".

The project required careful navigation of heritage approvals for contemporary interventions, including the two-storey rooftop addition. Briggs says, "For the roof extension, we had to set back the two-storey addition so it's not visible from the footpath". The design team worked from original architectural drawings of 1925 to reinstate elements, including the facade clock, and also introduced new features such as bay windows projecting into the service lane.

Development complexities also included changing legislation during construction. "There was major deviation on code compliance for fire safety, earthquake stability, and so on," Lardi says. He adds, "To complete the perfect storm, we started in the middle of the pandemic with supply chain issues, labour shortages, inflation".

The project's success may provide valuable lessons for other developers considering heritage adaptive reuse. Lardi particularly emphasises thorough upfront investigation. He advises, "Invest enough time—even more time than we invested—in the discovery and planning phase. You cannot assume". "Even if you find old blueprints, measure again because it's not guaranteed they were built exactly to blueprint".

From an architectural perspective, Briggs stresses the importance of experienced teams. He advises, "Use somebody who's already done it. Use a builder who's already done it, use an architect who's already done it, so you're not paying for the entire learning curve".

The partnership's record has attracted continued backing from Zagga, which sees potential for expanding the adaptive reuse model. "We would be happy to take on more of that," Cranfield says. He adds, "One of the challenges for the market is how do you convince groups that are as high quality as STRE to take on more of these types of building". "We've done it more than once and would definitely do it again," he says.

STRE reports consistent inspection activity since completion in May, with 38 per cent of one floor already leased. The company expects cash-positive returns within 12 to 18 months. Looking beyond financial returns, Lardi reflects on the project's broader contribution to Melbourne's urban fabric. "I think we're helping the city retain its character, and we're helping activate Flinders Lane without interfering too much with what's already there," he says.

"Being able to bring this historic building back to all the good parts of its original character, while also adding a new chapter to its life. Projects like this at one end of the spectrum, and 1980-1990 office buildings at the other, are being used as exemplar projects to help inform other developers that it is possible".

This article was first published by The Urban Developer and has been republished with permission. You can find the original article here.