No-vacancy sign hovers over Melbourne laneways

Melbourne’s laneways are as sought after among retailers as they are among shoppers, with just three shops in the CBD core currently available for lease.

A Savills report into Melbourne’s CBD retail market shows only three of the 181 retail spaces in the area bounded by Collins St, Elizabeth St, Swanston Walk and Latrobe St are vacant – just 1.6%.

The leasing market is equally tight for core CBD street front shops, with seven of the 247 spaces available, while only 19 of the 704 shops in the area’s shopping centres currently have no tenant, according to the report.

Leasing frenzy: Melbourne CBD retail vacancies hit five-year low

Landlords are likely to be the big beneficiaries of the demand for space, with a lack of new space coming online contributing to an expected jump in rents.

“New supply to the CBD remains limited to the refurbishment opportunities, adding just over 13,000 square metres of retail space over the next 18 months,” the report says.

The number of food outlets in Melbourne’s CBD has increased dramatically over the past five years.

“Limited supply coupled with rising population is likely to see international and domestic retailers both compete for prime retail space. As a result, Savills Research expects Melbourne’s CBD retail vacancy rate to remain tight over the medium term with rents likely to improve, particularly for prime retail.”

Realcommercial.com.au last month reported core shop vacancies have dropped 55% since 2011’s global financial crisis, when 64 retail spaces were on the leasing market.

New supply to the CBD remains limited to the refurbishment opportunities

There are now 28 more cafes, restaurants and takeaway food outlets than in 2011, while 38 extra clothing, footwear and personal accessory stores have moved into Melbourne’s 6.2 square kilometre city centre.

The report says the take-up of prime vacant spaces is almost instant, with big name retailers constantly scouting for potential store sites.