Chapel Street struggles despite hot retail strip market
Melbourne’s iconic Chapel St retail strip is continuing to struggle, with almost one in five shops now vacant despite a citywide boom in retail strip leasing.
New research in commercial agency Fitzroys’ Walk The Strip – Volume 2 report shows vacancies at the once thriving retail thoroughfare, which flows through Prahran, Windsor and South Yarra in the city’s inner south, have hit 18.1%, up from 15.1% a year ago.
And prime rents have plummeted, tumbling from around $1400 per square metre at the strip’s peak, to around $900-$1000 for the same spaces now.
Of the city’s other well-known retail precincts, only Richmond’s Bridge Rd has a similar level of vacancy, with most other strips experiencing vacancies of 3-6%.
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The nearby High St, Armadale strip has only 4.1% of its shops untenanted, down from 7.9% a year ago, while the adjoining Toorak Rd, South Yarra has also experienced a sharp increase in lease take-ups, with only 6.5% vacancy, compared with 9.1% at the same time last year.
Meanwhile, upmarket Church St in Brighton continues to be among the most tightly-held strips in the country for leasing, with just 1.3% vacancy, down from 2.7% last year. It attracts the highest rents among Melbourne suburban retail strips, with prime shops commanding $1250-1350 per square metre.
Vacancy rates on Melbourne’s key suburban retail strips
Fitzroy’s agent David Bourke says predictions of the death of retail locations due to online shopping are thus far unfounded, with precincts reworking their tenant mix and the tenants themselves proving resilient.
“Much of the change throughout the strips has already taken place in anticipation of Amazon’s introduction, and its impact on the strips will be more tempered than the build-up suggested,” Bourke says.
“The proliferation of delivery services such as Uber Eats, Menulog and Deliveroo represents a growing proportion of food and beverage turnover, and some operators are finding a secondary location that is sufficient for their needs as there is less reliance on passing trade,” he says.
“In addition to this there are a huge number of personal care businesses such as hairdressers, beauticians, skin care clinics, masseurs and gyms opening in the strips, into locations they previously wouldn’t have considered.”
Fitzroys says Chapel St’s challenges stem from its transition to a new type of commercial area, with a number of major projects currently underway.
Stonnington City Council has recently approved Newmark Capital’s plans for a $1.25 billion redevelopment of the iconic Jam Factory precinct in the heart of the strip, while a 10-level Aloft Hotel development at 402 Chapel St is also in the pipeline.
The 50-level Capitol Grand tower on the corner of Toorak Rd is currently under construction, a hotel and restaurant development is expected at 461-471 Chapel St and a $55 million, seven-level mixed-use project is to be built at 430-438 Chapel St.
