Melbourne’s smallest shops reveal shocking price per metre rates

A tiny shop front at 97 Swanston St, Melbourne, is sitting empty — despite its owners paying $184,000 per metre for it.

Forget Toorak and the towers at the Paris end of Collins St, Melbourne’s priciest piece of real estate is probably a 2sq m cupboard in a CBD laneway worth more than $190,000 a metre.

It’s more than ten times as valuable on a square metre rate than the more than $100m Coonac mansion that smashed the city’s house price record earlier this year — and business owners are even taking on the cost of filling in disused elevator shafts to get something similar.

But they’re facing mixed fortunes with one of the city’s most expensive properties sitting empty, despite the 14sq m shopfront at 97 Swanston St being bought at an incredible $184,000 a metre in 2012. It’s arguably the city’s most expensive walk-in shopfront.

RELATED: How to get Zac Efron, John Cena to your place

Melbourne house prices: $1m median milestone likely to hit soon

Holes of Melbourne: Mayor prepares to fight ‘zombie’ sites around the city

Meanwhile an 8sq m kiosk in Northcote plaza has hit the market with a $450,000 price tag that would make it among the most expensive pieces of suburban real estate ever sold in the city.

Fitzroys division director James Lockwood’s firm handled the sale of what is thought to be the city’s priciest property, a 2sq m premises at Shop 3, Causeway House, which set an incredible $190,000 a metre price benchmark in 2013.

While such sales have tapered off, Mr Lockwood noted demand was still there for similar premises.

The 2sq m shop 3 of 304-306 Little Collins St, Melbourne, (left of image) set a $190,000 a square metre record for Melbourne back in 2013.

A now empty shop front at 97 Swanston St, Melbourne, was the earlier record holder after selling for $184,214 a metre in 2012.

A disused lift shaft offered for lease in the depths of Melbourne’s lockdowns attracted five interested parties, before ultimately being rented by local sweet tooths Mork Chocolate – who have turned it into a contender for the smallest chocolate shop in the world.

“It went bananas,” Mr Lockwood said.

Today, he estimated the 6.5sq m premises would be worth as much as $350,000.

“And if there were 20 of them today in the city, they would lease in a month,” Mr Lockwood said.

Mork co-founder Kiril Shaginov has added a floor, a roof and designed a modest shop front to be run out of a window cut into the back wall in an effort to make it a popular destination.

“It was crazy, but in my head it was perfect,” Mr Shaginov said.

It now contains a cake fridge, a small coffee machine, two bar fridges and some elevated cupboards for storage — leaving room for two people inside of it, at a maximum.

Inside the Mork hot chocolate and cake shop built into an old lift shaftin Equitable Place.

And how the hole in a wall cafe looks from the outside.

While expensive by a square metre rate, Mr Shaginov said it didn’t feel that way for the returns it brought in.

“It’s about four years it’s been there now and we get a lot of regular trade, and it’s an iconic laneway so we get a lot of tourists who do chocolate or a streets of Melbourne tour,” he said.

Real Estate Institute of Victoria acting chief executive Jacob Caine said the tiny commercial spaces “surpass anything in the residential space by a gazillion miles”.

“This is indisputable evidence that great value can come in small packages,” Mr Caine said.

“And that’s testament to the value and the opportunity that those kind of micro-retail spaces can offer.”

Committee for Melbourne chief executive Scott Veenker said the government needed to do what it could to ensure business conditions continued to encourage “unique Melbourne icons to thrive”.

The 65sq m former 220 Collins St, Melbourne, shopfront at the corner of Swanston and Collins Streets set a $142,000+ benchmark when it sold for $9.25m.

55 Swanston St, Melbourne, is best known as a doughnut shop, but is also one of the most expensive pieces of real estate in the city at $124,118 a metre when it last sold.

“Melbourne as a laneway city is renowned for its hospitality and retail,” Mr Veenker said.

“We want consumers, tourists and businesses to continue to choose Melbourne and Victoria as a destination to visit and a place to do business.”

Industry consultant and Property 28 founder Clinton Baxter said the values were historically the highest per square metre along Swanston St, due to the high foot traffic walking — but despite working on some of the highest priced deals per metre in the past, said they were less likely today.

“It’s less likely at the moment, after Covid had such a detrimental impact on the CBD and the market,” Mr Baxter said.

“But they will come back. With population growth, that will lead to a return and a catch up.”

It’s a different story in the suburbs, with a tiny kiosk measuring just 8sq m in the middle of Northcote shopping plaza hitting the market.

97/25-143 Separation St, Northcote, could soon set a $56,000+ a metre benchmark for suburban Melbourne — but will still have a yield at 5.6 per cent, making it a prime target for investors.

The property is currently leased to a phone repair service that is paying more than $25,000 a year.

Despite being just over half the size of a typical Victorian carpark’s about 13sq m size, if sold in line with its $450,000 asking price the 97/ 25-143 Separation St would come out to a hefty $56,250 a metre, making it one of the priciest properties ever sold in the suburb.

It would even likely eclipse the likely price per metre cost of a $1m bathing box sale in Portsea.

Hudson Bond’s Josh Schache said the “unique” listing offered a lot of value, and even at the $450,000 asking price would return about 5.6 per cent a year — better than any high interest rate bank account today.

With the rent already locked in for future rises, Mr Schache is expecting strong interest in the property – particularly with the plaza set for a $500m redevelopment.

“So, in terms of an investment opportunity, it stacks up,” he said.

“In terms of what we’re seeing at the moment, you’d be pretty happy to get 5 per cent. And with the rent to go up, that will only increase.”

Despite just 2sq m of space on offer, this 17-19 Elizabeth St, Melbourne, site was leased at more than $20,000 a year.

A suburban travel agent working from a 27sq m space at 174 Barkly St, Footscray, is another of the more expensive per metre parts of suburbia at north of $15,500.

In Footscray, Trimson Partners’ John Verducci sold a Barkly St premises measuring just 27sq m for $420,000 in 2020 — more than $15,500 a metre.

In a further positive sign for the suburban market for minuscule real estate offerings, Mr Verducci estimated it would be worth $450,000-$500,000 today — even factoring in a slowdown from the Covid period.

While it suits the travel agent currently located there, he said it was really about the size of a few ATMs.

However, it’s a tiny store currently home to a Fromagerie across the road that stands out as the most impressive effort to squeeze more retail space into the suburb.

It used to be a laneway, before someone bought it and turned it into a three-storey shop on a plot of land measuring barely 20sq m.

The $48m sale of 274-278 Bourke St, Melbourne, also came with a major price per square metre at close to $97,000.

A 13sq m space at in an arcade off Little Collins St, Melbourne, last sold for $530,000 in 2018.

“It was surprising to see them pull it off,” Mr Verducci said.

“Who would have thought of sticking three shoeboxes on top of an old laneway and renting them out?”

Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox.

MORE: Roaches and crime, Melb’s ‘worst hotel’ for sale

Brighton waterfront: Poker player’s $30m+ mansion buy revealed

Dan Andrews’ ‘ghost’ home legacy revealed as apartment towers stall