SOME of Melbourne's signature shopping streets are struggling in the face of battered consumer confidence but most are weathering the storm, agents report.
Premium strips known for their retail focus, Chapel Street and Bridge Road, were finding it more difficult than others in the lead-up to Christmas, agents from Fitzroys and CBRE said.
Chapel Street had several flagship tenancies up for grabs, with adidas, Rip Curl and Politix recently vacating large stores.
Vacancies were at the southern less premium end of the street but the addition of some independent retail tenants was likely to offset any drift, Fitzroys agent Charles Emmett said.
"Judging by the quality of tenants looking to move into these strips . . . when you're seeing groups like LifewithBird, ksubi, Nudie Jeans moving into Chapel Street in the last five months, there's clearly money to be made there," Mr Emmett said.
While more "for lease" signs were now being seen on strips across Melbourne, they needed to be seen in the context of the more popular shopping streets having vacancy rates below 2 per cent for the past five years, CBRE senior associate director Mark Wizel said.
"Naturally, when a couple of signboards go up it is going to look as if retailers are struggling," Mr Wizel said.
Out of 87 shops in the "prime" section of Burke Road, only one shop was truly vacant.
Food and beverage was proving to be the most resilient business, Mr Wizel said. "There is constant demand from cafes, restaurants and boutique culinary offerings generally seeking spaces between 70 and 350 square metres in Melbourne's leading strips," he said.
Rents had been static over the past 18 months, Fitzroys director David Bourke said. "Properties that are well located will weather the ups and downs."
Williamstown's Ferguson Street and Douglas Parade were showing potential, Mr Bourke said. Both had recently attracted national retailers including Witchery and Meredith. "You're seeing areas that were probably once not in favour, which are now in favour, and you've got those nationals coming in."
Large retail sites recently vacated by Borders and Angus & Robertson in Burke Road had been quickly filled by Kathmandu and Cotton On, Mr Bourke said.
Another trend was towards short-term leases and investors putting superannuation into retail property. Tenants "looking to navigate through a difficult period" were asking about commitments on properties from as little as 12 to 24 months, Mr Wizel said.
"In the last 18 months, post the GFC, a lot of people have been shifting money out of equities, going for a private approach with their super and investing in strip retail property," Mr Emmett said.
Frequently Asked Questions about this Article…
Are Melbourne shopping strips struggling because of weak consumer confidence?
Some of Melbourne’s signature shopping streets have been feeling the effects of battered consumer confidence, and agents say a few premium strips have found trading more difficult in the lead-up to Christmas. However, most strips are weathering the storm rather than collapsing.
Which Melbourne retail strips are reported as most affected and which are holding up?
Agents reported that premium strips such as Chapel Street and Bridge Road were finding conditions tougher, with several flagship tenancies vacating. By contrast, many popular strips — and parts of Burke Road and emerging areas like Williamstown’s Ferguson Street and Douglas Parade — are holding up and even attracting national retailers.
What are current retail vacancy trends on Melbourne’s prime shopping streets?
While a few 'for lease' signs have appeared across strips, CBRE noted that the most popular shopping streets have had vacancy rates below 2% for the past five years. As one example, only 1 out of 87 shops was truly vacant in the prime section of Burke Road.
Are certain types of tenants proving more resilient in Melbourne retail strips?
Yes. Food and beverage tenants — cafes, restaurants and boutique culinary offerings — are proving the most resilient, with constant demand for spaces typically between about 70 and 350 square metres in Melbourne’s leading strips.
How have retail rents changed recently on these shopping strips?
According to Fitzroys director David Bourke, rents have been largely static over the past 18 months. Well‑located properties are expected to weather the ups and downs better than others.
Are investors using superannuation to buy strip retail property?
Yes. Agents report a trend of investors moving money out of equities and into a private approach using superannuation to invest in strip retail property, particularly in the last 18 months following the GFC period referenced in the article.
Are short-term leases becoming more common for retail tenants?
There is an increasing trend toward short-term leases as tenants try to navigate a difficult period. Tenants have been asking about commitments as short as 12 to 24 months, according to CBRE’s Mark Wizel.
What happens to big retail spaces vacated by chain stores — are they being filled?
Large retail sites recently vacated by chains such as Borders and Angus & Robertson on Burke Road were quickly filled by national retailers like Kathmandu and Cotton On. Other vacated flagship stores on Chapel Street (for example, Adidas, Rip Curl and Politix) have created opportunities that independents and other brands are moving to fill.
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