The Thomas Jewellers building has failed to sell at auction.
The two-story building, on the corner of Liebig and Lava Streets, was passed in at $1.51 million.
Bids for the site began at 1pm on Friday with the first offer made at $1.25 million.
Northeast Stockdale and Leggo auctioneer Matt Northeast then made a vendor bid of $1.5 million before the building was passed in.
He said negotiations were continuing on the sale of the site.
Thomas Jewellers closed on Tuesday after it was announced in October that Thomas Jewellers stores would close state wide.
Last week Mr Northeast said the building was one of the most prominent sites in Warrnambool.
“From the moment you turn off the highway and onto Liebig Street you see it,” he said.
“It’s a fantastic looking building, they’ve done an exceptional job renovating the building.
“Ever since the days of it being the Grand Hotel to then Thomas Jewellers – it’s always been a key site on Liebig Street and that’s why I think it’s a really good opportunity for someone.”