The Brunetti cafe was an early casualty of the rail project.Melbourne’s City Square will be compulsorily acquired by the state government to make way for work on the new metro rail project.

City Hall will be forced to hand over the Square in February next year, earlier than expected, under well-advanced plans put forward by the Metro Rail Project authority.

City Square, on the corner of Swanston and Collins streets, is a sizeable public open space in front of the Westin Hotel that is owned on a freehold basis by Melbourne Council.

The land is not zoned as a public park and so has no protection from redevelopment.

Underneath the square is a three-level, 400-space car park.

The Square will be fenced off and used as a staging area to excavate the tunnels beneath Swanston Street which will ferry trains north and south on the $11 billion transport project.

The Metro Rail authority has moved to quash speculation the Square’s compulsory acquisition will result in it being redeveloped as apartments once the rail line is complete.

“It is anticipated the City Square site will be returned to the City of Melbourne as public open space,” a Metro Rail spokesman said.

Concerns about future use of the Square were aired in a City Hall report which suggests the council will only support its compulsorily acquisition if it is returned as public open space – to be managed by the council.

Metro Rail has publicly endorsed redeveloping other sites above the CBD South and CBD North stations that it compulsorily acquired.

“MMRA is seeking private sector innovation in relation to commercial opportunities, including over-site developments … that will capture value to reduce the net cost of the Metro Tunnel,” the authority said.

With development rights, City Square could end up costing the authority up to $80 million.

Tenants of eight retail outlets at the base of the Westin Hotel that face onto the square will be forced to move under the deal.

Veteran Melbourne developers, the Marriner Group, developed the Westin Hotel site and still hold management rights to the retail spaces.

Jason Marriner said the group’s management rights would end once the tenants – Allegro Restaurant, Caboose Canteen and Starbucks, among others – moved out at the end of the year.

“It would be extraordinary if it [the Square] wasn’t returned at the conclusion of the works to public open space similar to what it was,” Mr Marriner said.

An early casualty of the upheaval, Brunetti’s cafe on the Flinders Lane corner, has already announced it will relocate to prime space in Emirates House, opposite the recently opened luxury St Collins mall.

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