This article is from the Australian Property Journal archive
CONFIDENCE is returning to Melbourne’s CBD retail sector, as enquiries rise across the city and vacancies are anticipated to fall in 2023.
According to Fitzroys’ Market Report—Melbourne CBD, all types of retail tenants are making commitments to CBD space in expectation of a continued return of workers to the city, after Melbourne’s average office occupancy picked up from 45% to 57% in November.
In 2023 so far, businesses in both the CBD and suburbs are more active in enquiry and more willing to commit to space.
“We’re seeing suburban traders making the considered move into the CBD. There’s clearly confidence that the workforce will continue to steadily return in 2023 and businesses are making commitments based on these expectations,” said James Lockwood, division director at Fitzroys.
This was seen in two new leasing deals last week, with Supernova Coffee and French patisserie La Yeahllow to open up shop on Makers Lane in the new NAB headquarters building at 405 Bourke Street.
While Fitzroys also secured a new lease for Mörk, which will open a second CBD location at 13 Centre Place on a long 5+5-year deal.
With a lease also negotiated for Union Kiosk, who are relocating to a larger property at number 12 Howey Place after relocating to the laneway six months ago.
Fashion and streetwear retailer Underground Archive will open its first brick and mortar store, with a space at hop 4, 237-239 Flinders Lane.
Back in Howey Place, bespoke garment maker Mr. Cuff has opened up a new shopfront at number 6-8, through the City of Melbourne and Victorian Government’s Shopfront Activation Program, signing a 2.5-year lease at $1,100 per sqm.
Siam Botanical Massage is also expanding its CBD operations, taking on a new 5+5-year lease at 122 Hardware Street.
While Hunt Leather has relocated from Little Collins Street to the 271 Collins precinct on a 3+3+3-year term.
“There are multiple tenants with a successful track record of CBD trade that have witnessed the post- COVID rebound in CBD visitation for themselves, and have decided to invest further in the city and open new locations,” added Lockwood.
He also noted that fitted hospitality spaces were staying available for least amount of time, with CBD hospitality demand seeing operators willing to lease specialty space and retrofit them with kitchen infrastructure.
“With COVID lockdowns and restrictions in the rearview mirror, we’re expecting office occupancy to lift steadily throughout 2023. That will have a positive effect on daytime trade, and will spill over further into night- time activity throughout the week,” said Lockwood.
Vacancies in the CBD Retail Core, according to Fitzroys data, is at 17.1% with more than one third of all tenancies are currently occupied by food and beverage operators.
While La Trobe Street’s prime section vacancy is relatively low at 9.1%, with the precinct expected to be see the greatest benefit from the return of Chinese international students in the coming months.
“The return of Chinese international students will be a major boost for the CBD. There has been a noticeable uptick in activity during day and night over the past year as students returned from around the world,” added Lockwood.
“China accounts for 25% of all international students enrolled in Victoria and we expect a further uplift in CBD activity across all hours in the coming months as a result of Beijing’s instructions.”
While vacancies in the Flinders Street precinct between Elizabeth and Russell Street are consistently low at 5.4%, beaten only by the famed “Paris End” of Collins Street East, at 2.47%.
