Melbourne’s Metro Tunnel project transforms Shrine into hot property
The precinct just to the west of the Shrine of Remembrance has become hot property for office operators. Picture: David Caird.
A Metro Tunnel real estate boon is turning Melbourne’s Shrine of Remembrance into hot property.
The St Kilda Rd and South Melbourne office precinct neighbouring the soon-to-be opened Anzac Train Station opposite the Shrine has been tipped for rent rises of as much as $35 a square metre (8.5 per cent) as the new rail hub comes online this year.
It follows another leasing boon along Swanston St where food and retail operators have been signing up long-term leases in anticipation of increased foot traffic in that area.
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Commercial real estate firm JLL has tracked significant increases in leasing activity in the area, with more than 19,500sq m of office space within the Anzac Station’s walking-distance catchment attracting new leases in the past year.
While Property Council data indicates Melbourne’s CBD has close to a million square metres of office space untenanted, withan 18 per cent vacancy rate, there are now 26 buildings in walking distance of the future train station on St Kilda Rd with full occupancy.
JLL head of strategic research Annabel McFarlane said after years of construction disruption the anticipated completion of the metro tunnel, businesses were already moving to take advantage of the area — something that was expected to happen in the years ahead to the Arden-Macaulay precinct on the other side of the CBD.
A recently leased office at 380 St Kilda Rd, Melbourne, a short walk from Anzac Station.
The future Anzac Station precinct plan. Source: bigbuild.vic.gov.au website.
“We are already seeing it’s influence in the St Kilda Road office precinct, with increased office leasing activity around the St Kilda Road ANZAC station site now that the worst of the above ground disruption has come to an end,” Ms McFarlane said.
“We anticipate this to accelerate for this precinct as the benefits of the location become apparent with the opening of the station and businesses seek to access a wider talent pool.
“The businesses are confident that it will give them access to more staff and better foot access for their customers.”
Separate research by the firm shows there is an 8.5 per cent premium for city-fringe office hubs within walking distance of train stations in South Yarra and Richmond.
“A similar uplift in average rents to office assets in the ANZAC station precinct of St Kilda Road implies rents could rise from circa $415 per sqm pa to approximately $450 per sqm pa when the Metro rail project completes,” Ms McFarlane said.
Ms McFarlane said while needs were changing for many offices, particularly the amount of desk space required, the need for space wasn’t necessarily dropping – as many businesses were seeking more meeting rooms and collaborative areas.
Ironically, work from home is part of what they believe is driving the demand along the Metro Tunnel.
Inside the Parkville Train Station set to be opened as part of the Metro Tunnel upgrade program. Picture: David Crosling.
Larger format meeting and collaboration spaces like this one at 380 St Kilda Rd, Melbourne, are expected to be more important for offices taking up space in the area.
“Work from home has amplified the importance of well located offices, because you are potentially competing with work-from-home and if you need to have your staff connected in a building, you want to be in a better location to make that worthwhile for your staff to come in,’ Ms McFarlane said.
Overall, the Metro Tunnel is expected to divert about 32.7 million commuters a year from traditional rail routes.
It is expected to open to public use in the coming months, with stores inside the train stations having already attracted strong leasing activity from a mix of dining and retail groups.
In addition to Anzac Station on St Kilda Rd, the other new stations will include Parkville and Arden Stations north of the city, as well as CBD stops at the State Library and Town Hall.
While already well connected pockets of Melbourne such as Collins St, and particularly the Spring St end of it, were clearly the city’s main attractions, and there was ongoing demand for the eastern end of the CBD, the infrastructure boon would have an impact.
“We feel the Anzac Station will have the most noticeable change as it wasn’t well connected before,” Ms McFarlane said.
A medical suite space at 21/37-39 Albert Rd, South Melbourne, is also among the recently leased properties near the Shrine.
Inside the Metro Tunnel beneath Melbourne that is set to open to public transport use in the second half of 2025. Picture: Victorian Government.
While Parkville which is also part of the new tunnels list was already very much in demand for education and biomedical businesses, she added that the future of the Arden-Macaulay precinct on the north side of the city was likely to see a similar result to the Anzac Station pocket over time.
“Arden is the next most interesting, but it’s a slow burn,” she said.
The JLL research follows separate observations from commercial real estate firm Fitzroys, who have observed plunging vacancy rates for retail venues in Melbourne’s CBD.
In 2023 there was a 14.1 per cent vacancy rate, by earlier this year it was just 6.1 per cent.
But along Swanston St it has dropped to just 2.6 per cent, lower than even the Parliament end of Collins St — regarded as the city’s premier commercial precinct.
Most of it has been driven by eateries.
Fitzroy’s director James Lockwood said the shift was coming off the back of anticipation of the Metro Tunnel works being completed and an increase in commuter traffic.
Late last year it was also revealed that signiciant leases have been signed within the stations by operators including IGA, People’s Coffee, Sushi Sushi, KFC, Starbucks and 7-Eleven.
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