Chapel St loses lustre as vacancies rise
Signs of life are returning to Melbourne’s iconic suburban retail strips, however, the number of vacant shops on Chapel St is steadily increasing, according to the latest research by global property consultancy, Knight Frank.
Once the darling of Melbourne’s vibrant shopping strips, the thoroughfare has seen its vacancy hit a record high of almost 11 per cent.
Richard Jenkins, research director, Knight Frank, said that the vacancy rate has constantly risen in Chapel St since 2009. Chapel St, South Yarra has a five-year average of five per cent.
“Bridge Rd recorded a massive drop from an all-time high of 19.3 per cent a year ago, to a current rate of 13 per cent. It was the first decline in vacancy rate along Bridge Rd since 2005.”
“Bridge Rd still has the highest vacancy of all the strips but it is definitely on the road to recovery which is primarily due to the rise in apartment development along with landlords also now setting more realistic rentals.
Jenkins said that Bridge Rd also had stock withdrawn for residential development including 153-177 which was bought by Little Projects.
He said that like Bridge Rd, many vacant shops in Chapel St will probably end up as a residential conversion which will add more pedestrian traffic to the precincts.
Jenkins said that Bridge Rd and Chapel St also experienced the highest level of churn, with both recording around 25 per cent, compared to the average of 15 per cent across all strips, which is still higher than the annual average of eight per cent.
“Much of the churn has been due to tenants repositioning in the same strip, taking advantage of the competition between landlords as highlighted by Westpac, Kookai, and Princess Highway, which all relocated to new premises along Chapel St,” he said.
According to the analysis, vacancies dropped in Glenferrie Rd, with the Hawthorn end falling from 6.8 per cent to 4.1 per cent, while the Malvern precinct fell from five per cent to 3.5 per cent. Church St, Brighton also decreased from 1.1 per cent to 0.6 per cent.
Burke Rd, Camberwell; Acland St, St. Kilda and Toorak Road, South Yarra all remained relatively stable at 9.5 per cent, 2.7 per cent, and 7.6 per cent respectively.
Jenkins said that across all the strips, the top incoming tenant type was clothing retailers followed by restaurant and cafe based occupiers. Notable fashion entrants into the strips included MJ Bale, Bonds, Peter Jackson, Peter Alexander, and Calibre.
He said, interestingly Bridge Rd went against the trend with demand mostly from service based occupiers, including those from the health sector, leveraging off the presence of the Epworth Hospital in the strip.
Jenkins said that said those strips which had performed the best over the past five years, were those with a diverse tenancy profile of occupiers along the strip and those offering a point of difference in comparison to enclosed shopping centres and the CBD.
According to Knight Frank, rents in Chapel St, South Yarra remain the highest achieving rental levels between $800 and $1,500 per sqm per annum, while Bridge Rd rents range between $350 and $900 per sqm.