Artist impression of 170 Collins St Melbourne

An artist's impression of the proposed office tower at 710 Collins Street.

Heritage groups have voiced concerns over plans to demolish more of a 125-year-old railway goods shed in Docklands, acknowledged by planning authorities as Victoria's ''most architecturally elaborate'', to build a 34-level office tower.

Lorenz Grollo's development and construction firm Equiset in 2010 won awards for a three-storey office building it adapted into the old goods shed at 710 Collins Street, which now houses government land authority Places Victoria. Equiset has now applied to knock down that building - and more of the heritage-listed goods shed - and replace it with a $250 million office tower.

The goods shed, 385 metres long when it was built in 1889, has already been partly demolished to make way for the extension in 2001 of Collins Street through Docklands to the Yarra River. Equiset's plan would see another 30 metres of the remaining part of the goods shed knocked down.

''It's not the best use of this building,'' National Trust chief executive Martin Purslow said of the plan. Another part of the shed that had also been refurbished had seen a fantastic heritage preservation, he said.

''Having had that … at one end, we're lacking imagination and vision at the other end.''

However, construction of the new office tower would significantly open up the goods shed to the public at street level, allowing easier Collins Street access.

It would also potentially see Dockland's dormant Village Street turned into what a report for the developer said could be a ''Covent Garden-style'' marketplace.

The Victorian Heritage Register, which protects selected buildings from demolition, says the goods shed's ''huge scale and grand style graphically illustrates the population and economic growth in Victoria during the 1870s and 1880s''.

And a 1991 heritage study of Docklands found the goods shed's ''flamboyant architectural style [demonstrates] the importance of the railways'' to Victoria before trucks were dominant.

But a heritage study commissioned by Equiset found that, because the goods shed had already been partially demolished to make way for the Collins Street extension, more demolition would be acceptable.

Tristan Davies is president of Melbourne Heritage Action, a community group that campaigns on CBD issues. He said the plans, while ''not great'', could have been far worse. ''If anything, it's probably opening up the heritage to the street level better than what's there now,'' he said.

Heritage Victoria will decide later this year if the demolition can proceed.