A surge in recent leasing activity suggests Docklands' long retail drought may be breaking.
The waterfront precinct has been plagued by empty shops and lacklustre trading conditions since the 2009 failure of its tourism drawcard the Melbourne Star Observation Wheel, a situation compounded by a flood of new development space.
Savills Australia research shows 79,646 square metres of retail space has been added in the Docklands since 2003. About half of that was in new office or residential developments.
But while retail conditions hit rock bottom six months ago, they were now - along with the wheel - beginning to turn, Savills Australia associate retail director Jeremy Marmur said.
In the past four months Savills had concluded seven deals, with more expected to be finalised soon, Mr Marmur said. Other agents report a pick-up in activity.
Jones Lang LaSalle's Mathew George recently leased both levels of the former Livebait restaurant in New Quay to different tenants on $250,000 per annum net rents.
The former Melbourne Yacht Club Hotel also sold recently for around $850,000, he said.
Other recent deals include:
■717 Bourke Street - Pilates Studio
■Yarra Point Tower, Lorimer Street - Urban Hub Convenience Store and Pizza Society
■ Shop 17/18 Docklands Drive- Aria Restaurant and Function Centre
■800 Collins Street - Code Black Cafe
■Shop 11 - 12 Docklands Drive - Almina Restaurant and Bar
■750 Bourke Street - Kebab World
■58-62 New Quay Promenade - bar and restaurant
Almina Restaurant, a Lebanese eatery, took a 15-year lease on the 465 sq m in Docklands Drive on a rent of $150,000 per annum, Mr Marmur said.
The supply-led retail development had blown Docklands' vacancy rate out to 23.1 per cent, Savills researcher Glenn Lampard said. As a result, space had grown out of kilter with consumer demand.
The 120-metre-tall ING Real Estate-owned Observation Wheel this week began advertising jobs for guest relations, sales, marketing and business services.
The wheel closed after only 40 days when buckles and cracks were detected.