One of the city's best known skyscrapers, the Rialto, will have a low-rise retail and office building built on its forecourt on the corner of Collins and King streets, in another sign of the westward creep of Melbourne's CBD.

The Rialto opened in 1986 as the southern hemisphere's highest tower. At 253 metres, it is now dwarfed by the Eureka Tower at almost 300 metres but remains a landmark where 3000 people work.

Lorenz Grollo is the son of Rino Grollo, who, with brother Bruno and St Martins Properties, developed the Rialto.

On Thursday, Lorenz Grollo said the new $100 million project "wrapped" around the existing tower would have levels that joined floors in the Rialto.

He said the new building was an important development for the Grollo family.

"Next year, Rialto is going to be 30 years old since the family got the certificate of occupancy," he said. "The key thing for us is to reinvigorate so we stay up with the times."

Asked if he wished the strip clubs that remained around the corner in King Street would go away, Mr Grollo said the "short answer is 'yes' ".

"When those permits were granted was before Rialto, so King Street was really at the edge of the CBD," he said. "The city has changed. Those sorts of venues, they had their time and place but this is probably not the time and place any more."

The "Rialto Regeneration" is due for completion next November, the Rialto's 30th anniversary.

Lord mayor Robert Doyle said the development was a strong sign that Melbourne's business district was shifting west, as more firms relocated around Docklands.

The Rialto was at the centre of an emerging "mid-town" business district as the CBD had expanded to meet the Docklands waterfront, Cr Doyle said.

"Melburnians love the Rialto, but . . . at the bottom level it did not work as well as the rest of the building did," he said.

The Bank of Melbourne will take up the anchor office tenancy in the new five-level tower.

Commercial estate agent and developer Bill McHarg was a member of the "Collins Street Defence" movement that helped save some of Melbourne's most striking heritage buildings during the conservation battles of the 1970s and 1980s.

Many battles were lost, including one to save the Robb's Building on the corner where the new five-level building will be located.

The Robb's Building at the corner of Collins and King streets, pictured in 1890, was demolished in 1982 to make way for the Rialto. Image courtesy of State Library of Victoria.

"We were desperate to save that building because it created an historic bookend set of buildings going up to William Street," he said. "It was one of too many that was lost to the rapacious development cycle of the 1980s," he said.