568 Collins St retail nears full occupancy as demand drives western core rents up more than 30%
An all-time high demand for retail space within the western core of the Melbourne CBD has seen strong competition for the remaining space at 568 Collins Street.
Colliers International’s Ben Tremellen and Cam Taranto have negotiated two new leases to take the retail component of 568 Collins Street to about 85% occupancy. One final 100sqm food and beverage tenancy remains available, with multiple interested parties.
Bread Top will open a 42sqm outlet on a six year lease, while Rock the Wok will move into another 42sqm store on a 10 year lease. Both tenants will pay approximately $3000/sqm (net) or $126,000 per annum.
“We have seen interest from a wide range of national and local tenants, spanning from financial institutions to the latest food and beverage operators to hit the market,” Mr Tremellen said. “Demand for retail within the western core of the Melbourne CBD is at an all-time high, due largely to low supply levels.
“Stronger trading conditions and limited supply at the western end of Collins Street can be attributed to the expansion of Docklands and the large number of residential developments within the area. With this increased demand comes the opportunity for landlords to activate their buildings with further retail and improved returns."
Mr Taranto said retail rents along the western end of Collins Street had risen by more than 30% in the last 12 months.
“The proximity to Southern Cross Train Station and strong residential and commercial development in the area, coupled with an ever-tightening retail vacancy, has allowed significant rental growth in the western core,” he said.
Breadtop and Rock the Wok join EzyMart, which will open a new 42sqm store on a five year lease.
“In order to capture the dense pedestrian traffic from Southern Cross Station towards the CBD core, EzyMart has secured two tenancies on opposite sides of the street, one at 568 Collins Street and one at 567 Collins Street,” Mr Taranto said.
“Catering to the high pedestrian traffic numbers in the area, we will see three convenience stores along Collins Street within 50m of each other – and there will soon be more. Southern Cross Station, the city’s main terminus for country and interstate trains and buses, has more than 55,000 people pass through on a normal working day and around 15 million people per year."
Across the road from 568 Collins Street, Colliers International has also secured full occupancy for the new landmark retail precinct, The GRID, at 567 Collins Street.
“We are experiencing huge demand throughout the western core of the Melbourne CBD,” Mr Tremellen said. “We have seen an enormous opportunity in the under supply of the western core, especially along Collins Street, based on Colliers International research and our on-the-ground experiences.
“As a result, we have focused on this precinct and seen rents re-set throughout the area due largely to its status as a major pedestrian thoroughfare which draws both locals and visitors to the wider CBD on a daily basis.
“Retailers are also seeing stronger trading conditions at the western end of Collins Street which, with the large number of residential developments in the area, continues to expand. These conditions are encouraging seven-day traders to take notice and consider expanding into these growing five-day locations.
“We are seeing further supply slowly trickle into the market with retail activations from building such as 525 Collins Street (Rialto), 433-455 Collins Street, 600 Bourke Street, 470 Collins Street, St James and the William.
“With this increased demand comes the opportunity for landlords to activate their buildings with expanded retail offerings. The higher returns available are definitely an appealing proposition.
“There is still significant demand for smaller food and beverage tenancies in particular, with landlords increasingly considering splitting tenancies to create multi-shop spaces to cater to the market and take advantage of stronger rents per square metre.”
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