"The vehicle was wanted in relation to a theft matter."
A helicopter with a search light was flying above the area earlier in the evening and the spokesman said a police boat would be launched to try and coax the people out of the flats.
Local man Michael Holloway said earlier he could see about five police patrol cars parked at the end of Victoria Avenue with several officers standing waiting near them.
"The helicopter is still circling. It appears to be focusing on the Parnell Peninsula now."
Hobson Bay was very tidal, Mr Holloway said, and perhaps and not the most practical place to hide.
"It would be pretty sticky if you got caught out there."