Food franchises that have reached a saturation point in Sydney are setting their sights on Melbourne's CBD because of its expanding population of apartment dwellers.
Many small food retailers with a strong franchise presence in Sydney have begun to aggressively expand stores in Melbourne, CBRE's Zelman Ainsworth said.
Cafe business Luneburger German Bakery which has eight stores in Sydney was the latest arrival in Melbourne signing a lease for its first store in Elizabeth Street, Mr Ainsworth said.
"Tenants have reached a ceiling and are looking at other markets to expand into."
Food and beverage as a proportion of the city's retail space has grown significantly since the global financial crisis, now filling 25 per cent, figures from Savills Australia show.
Brisbane-based Eagle Pizza Boys were also inquiring about space after taking a stake in Victorian cafe chain Degani Bakery Cafe, Savills' Michael Di Carlo said.
Cibo Espresso, an Adelaide coffee franchiser, was seeking major expansion on the eastern seaboard after partnering with private equity-owned Retail Zoo, Mr Di Carlo said.
The growth in people living in the CBD, shoppers and city workers were driving the expansion and focus on Melbourne.
Mr Ainsworth said the new Emporium development was taking a lot of tenants out of the market but the space was being absorbed quickly, which was keeping vacancy rates low.
Other licensees with a strong Sydney presence that were now in Melbourne include Cupcake Bakery, Sumo Salad, Blow Dry Bar, Wow Cow and Ben & Jerry's ice creams. Guzman Y Gomez and Mad Mex also have aggressive rollout plans.