Melbourne retail vacancy rate plummets as F&B sector eats up space

Melbourne’s shopping strips have made a staggering recovery as vacancy rates drop below pre-Covid levels, according to new research.

Real estate agency Fitzroys’ latest Walk the Strip report says the reinvigoration is led by an array of cafes, eateries, restaurants and bars cropping up in the suburbs as businesses continue to expand and enter into new markets.

Vacancy rates across 36 key shopping strips fell from 10.3 per cent last year to 6.7 per cent with about one-third of all tenancies or 33.4 per cent being food and beverage outlets.

Service retail such as hair, beauty, nail salons and gyms plunged by 3 per cent to 26 per cent since 2019 while specialty tenancies fell from 37.7 per cent in 2017 to 30.9 per cent now.

James Lockwood, Fitzroys’ division director, said Melbourne’s local shopping strips have “bounced back” from one of the biggest crises faced by the city in decades.

“Lockdowns and flexible work arrangements, have seen more Melburnians spend their money close to home and our villages have reinforced their position as the heartbeat of their local communities.”

According to Lockwood, a “spike” in eateries was the first visible leasing response seen to Covid as more businesses opted to move into smaller spaces with an existing kitchen infrastructure in place.

“These spaces present fast and cost-effective Covid-proof opportunities to remain active, or to expand into new locations and markets.”

Retail strip properties fetch $50,000 to $75,000 of rent per annum and premises with minimal tenancy works are usually preferred over those that require a refit.

To combat the rising construction costs of retail fit-outs, many operators now prefer minimal seating requirements or fully independent takeaway business.

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