Vacancy rates hit new high in suburban strips
Almost one in six shops stands empty in one of Melbourne's premium shopping strips as tough retail conditions continue to hurt suburban streets.
Vacancy rates across 11 prime suburban streets reached an all-time high in August, up to 7 per cent, according to Knight Frank research.
"It has reached the highest level in 10 years since we began recording data," research director Richard Jenkins said.
Some strips are suffering more than others.
Vacancy rates in the one-time discount fashion heartland of Bridge Road have shot up to 16.5 per cent, a rise of 5 per cent from the previous year's peak.
The number of empty shops in South Yarra's Toorak Road and Malvern's Glenferrie Road has almost doubled.
And there may not be much relief ahead for battered traders.
Retail trade rose by just 0.1 per cent in July after a flat result in June, the latest official figures show. The all-important category of discretionary (non-food) spending fell by 0.3 per cent in July and rose by just 0.5 per cent over the year - below the rate of inflation, according to the Australian Bureau of Statistics.
"Whichever way you cut it, the results highlight the tough trading environment being faced by businesses," CommSec economist Savanth Sebastian said.
Streets were likely suffering because rental prices were too high and landlords needed to adjust, said Sean Sands, research director at Monash University's Australian Centre for Retail Studies.
"They should be getting tenants in rather than doubling the rent every 12 months," Dr Sands said.
Temporary tenants, pop-up spaces and innovative use of retail was a short-term solution to high vacancy rates. "There are hundreds of up and coming designers who are struggling for places to showcase their products."
Local shopping streets were too important to turn back into residential housing as had recently been suggested as a solution for Britain's high streets, Dr Sands said.
Some streets defied the vacancy trend. Strong performing strips where vacancies decreased over the year include Burke Road, Camberwell (6 per cent); Puckle Street, Moonee Ponds (2.7 per cent); Acland Street, St Kilda (2.8 per cent); Clarendon Street, South Melbourne (4.1 per cent); and Church Street, Brighton (1.1 per cent).
Shopping streets must evolve if they are to survive, Mr Jenkins and Dr Sands said.
It was unlikely retailers would be faced with a similar level of technological disruption in the next five years as they had in the previous decade, Dr Sands said.
Bridge Road had the highest churn rate of tenants, 11.9 per cent, closely followed by Acland Street at 11 per cent, Knight Frank's figures show.