Struggling suburban shopping strips are being saved by the arrival of new apartment dwellers who tend to shop, eat and gather on streets near their homes.
Shoppers in Church Street, Brighton. Photo: Simon Schluter
Research from Savills Australia shows suburban shopping streets – once plagued with rising vacancies and empty shopfronts – have turned the corner with vacancy rates falling by an average of 25 per cent over the last four years.
The change is being attributed to growing numbers of new apartment dwellers.
Rapidly rising property prices in inner and middle ring suburbs and developer-friendly policies encouraging higher density projects on suburban retail strips have resulted in a population boom in suburban shopping streets across Melbourne.
Savills found overall retail vacancy rates have fallen from 9.5 per cent to 7 per cent in a survey of 2620 shops conducted over a four-year period from May 2012.
“Retailers in the most popular strips, such as Chapel Street and Toorak Road can generally now look forward to tighter vacancy with stronger fundamentals underpinned by the massive influx of residents to new apartment developments,” research manager Monica Mondkar said.
Not only were more shops open, but the mix of what they were selling had also changed and as a result they were staying open longer.
Cafes, restaurants and food stores – with longer opening hours – were the new darlings of the strips.
The number of hip eating and coffee venues has shot up by 16 per cent over the last four years while clothing and accessory outlets saw a correspondingly large decline.
Savills retail services director Michael Di Carlo said the shift towards food and beverage outlets was connected with a dramatic growth in apartment living.
“Population growth has been the key to the growth in these sectors as they cater for the most immediate needs of local residents,” he said.
Parts of South Yarra around Forest Hill and Toorak Road have seen a 5.6 per cent lift in the number of people moving in over the last year, figures from population experts .id (informed decisions) show.
Population numbers in Abbotsford grew by 7.6 per cent while Collingwood’s shot up 8.6 per cent with most living in new housing close to strip shopping streets, .id’s urban economist Robert Hall said.
Changes in housing density and consumer spending habits were also shifting the product mix offered by retailers.
“People are eating out more and taking food home more, hence the increasing demand for cafes and restaurants,” Mr Hall said.
As well, more doctors, gyms and other services were occupying shopfronts to cater for rising populations which, in turn, was improving safety, encouraging night time activity and strengthening retailing diversity, he said.
Not all strips are prospering though.
Empty shops still prevail in Bridge Road, Richmond, despite it recently becoming the epicentre of mid-rise apartment development.
Despite stubbornly high vacancy rates (13.6 per cent) there was a “silver lining”, said Gorman Commercial’s Stephen Gorman.
“Cafes and funky eateries are filling vacant stores and breathing new life into the strip,” Mr Gorman said.
Shops in suburban strips have long been a favourite of small investors.
“Yields have always been tight in these markets but those factors have seen even further downward pressure to the point where yields around 3.5 to 4.5 per cent are now much more common,” Mr Di Carlo said.
Rents for key shops in top strips range between $800 and $1200 a square metre.
Date: 1st June 2016
Author: Simon Johanson