Market Analysis: Victorian Strip Retail – A Sector on the Rise

The Victorian strip retail market has demonstrated remarkable resilience and adaptability in the past 36-months.

It has emerged from the pandemic stronger than ever, with bustling precincts across the city fuelling demand and driving growth among investors, while reflecting Melbourne’s distinctive retail culture.

Low Vacancy Rates Across Key Melbourne Strips

Melbourne’s leading metropolitan retail precincts continue to deliver solid performance.

Vacancies in some of the city’s more prominent strips are notably low, with a steady flow of development and healthy patronage helping to fill key spaces and keep them occupied.

See below for a snapshot of what is happening at important shopping arterials around the city:

• Bridge Road – vacancies dropped by 3.5 per cent in the past 12-months to sit at 7.2 per cent
• Chapel Street – the strip’s long-term low vacancy experienced a slight adjustment, growing 1.5 per cent in the past 12-months
• Glenferrie Road – continued its stable downward trend, dropping by 1.1 per cent over the year to 6.6 per cent
• Smith Street – vacancies have dropped further to just 3.2 per cent in this very tightly held retail arterial

Drivers of Strip Retail Investment Success

There are several factors contributing to the sustained success of Melbourne’s strip retail properties.

Prime inner-metropolitan locations generally benefit from an affluent surrounding residential catchment, which helps to underpin a consistent stream of customers with good spending capability.

Retailers also enjoy the advantage of being surrounded by other premium brands that occupy stores with elevated experiential qualities. The tenant mix can also create synergistic hubs that draw consumers seeking variety in a single visit.

Additionally, the proximity to essential retail outlets like Coles, Woolworths and other specialty stores also ensures continuous foot traffic, creating benefits for the surrounding business community.

Exciting Opportunities & Results via Jones Real Estate

We believe several Melbourne retail strips are poised for future growth, evidenced by some of our recent transactions and the quality of listings we are seeing come to market.

Our recent sale of Hawthorn House for $2.050m, a 333 sq m corner-site property at 150 Burwood Road, is a terrific example of investor appetite for well-positioned retail assets that are surrounded by a well-established residential community.

Retail in Richmond is continuing its resurgent form. Our listing at 242 Bridge Road – a double-fronted 566 sq m property spanning two levels – sold at auction in November for $3.150m and presented as an excellent opportunity to enter the market here.

There was a clear trend on the buyer profile throughout the 242 Bridge Road campaign, with all four registered bidders and the eventual buyer looking to own and operate their established businesses from the asset.

In the adjoining suburb of Abbotsford, we have been appointed by high-profile talent manager Ralph Car, champion Richmond footballer Dustin Martin and Chris Bissiotis to sell a portfolio of retail assets along the cultural hub of Victoria Street.

Coming to market through the group is 367 Victoria Street, a 560 sq m asset spanning two-storeys which we expect to achieve a sales price of $5 million under vacant possession.

Just down the strip, we are also offering for sale four adjoining retail spaces on a triple-fronted corner site between 401-407 Victoria Street. This collection of properties enjoy strong future development potential and holding income arrangement. These properties have been valued at $9 million.

Over in South Yarra, our listing at 22 Wilson Street marks another well-credentialled chance to enter a thriving retail zone. For sale via private negotiation, the 74 sq m property is tenanted by Australian Laser & Skin for the next three-years (with options to extend to 2023) and generates a net passing income of $50,033.75 per annum.

Thanks to its positioning within a precinct undergoing rapid residential development and neighbouring tenant mix, we anticipate this to help the property fetch approximately $850,000.

Take the Next Step in Your Retail Investment Journey

With Melbourne’s strip retail sector gathering excellent positive momentum, our experienced sales team strongly believes that now is an ideal time to explore retail property investment options.

We are here to provide insights, support and guidance to help investors navigate this sector of the market. Whether you are seeking a foothold in a high-growth strip or a well-established location, our team would be glad to assist you.

For more insights or to discuss your commercial property plans, please reach out to us at info@jonesre.com.au.