The emergence of the Melbourne CBD as a popular shopping destination could be behind a surge in vacancy rates amongst the city’s traditional retail strips.
A new report by Knight Frank shows that vacancies on some of Melbourne’s most renowned retail strips are on the rise, most likely as a result of the emergence of the CBD as a popular shopping district.
Knight Frank’s figures show that all of Melbourne’s key retail strips have logged sharp gains in vacancy rates, leaving certain once flourishing areas in a state of semi-desertion.
On Richmond’s Bridge Road, as many as one in every five retail properties is currently vacant, for the shopping strip’s highest vacancy rate in a decade.
South Yarra’s iconic Chapel Street and Camberwell’s Burke Street have both seen vacancy rates rise to five years highs in just the past 12 months, with nearly a tenth of outlets now vacant. On Chapel Street vacancy rates have risen from 6.1 per cent to 8.4 per cent in the past year, while on Burke Street the figure has increased from six per cent to 9.5 per cent over the same period.
Analysts impute the ailing state of Melbourne traditional retail strips to the emergence of the city CBD as a popular rival, a phenomenon which has received a recent boost from the unveiling of the 225-store Emporium Melbourne shopping complex earlier this year.
This theory is vindicated by the low vacancy rate of the CBD retail market compared to the average for Melbourne’s other shopping strips. At just three per cent, the vacancy rate for Melbourne’s prime CBD retail market is well under half the shopping strip average of 7.7 per cent.
Other factors hitting Melbourne shopping strips include the rise of online shopping, which invariably provides lower prices compared to brick and mortar retailers, as well as weak consumer sentiment.
Not all retail strips are struggling, however. South Yarra’s Toorak Road has seen vacancies fall from 12.8 per cent to 7.7 per cent, while Brighton’s Church Street remains exceptionally popular with Melbourne shoppers, as attested by its 1.1 per cent vacancy rate.
Knight Frank also points out that the major shopping strips could soon enjoy a turnaround in their fortunes due to the large number of apartment complexes currently being built in their vicinity, as well as the lack of retail venues in other parts of the city.