The changing face of “High Street”-style retail strips once dominated by designer fashion is creating opportunities for commercial leasing agents to target businesses providing personal services and hospitality.
Operators selling unique high-quality food and beverage are already partially filling the void left by the decline of the traditional upscale shopping street. Now a large array of health and well-being services are joining them, filling vacant spaces left by the flight of mostly fashion stores to online retailing and major shopping malls with high foot traffic.
Fred Nucara, director of one of Melbourne’s largest suburban commercial leasing agencies Aston Commercial, says from these are the two big shifts seen in the past several years from the agency’s tracking of up to 120 leasing deals annually.
“The first I call the Mastercard and MKR effect,” Mr Nucara says, referring to the smashed avo and latte trend triggered by the growing interest in quality food and beverage. “This has lifted hospitality to a whole new level and encouraged an entire customer base to spend their money differently.”
Fit & fabulous
The second and fast-rising shift is the influx of tenants from health, beauty and fitness industries – predominantly massage, physio, pilates, yoga, 24-hour gyms, beauticians and cosmeticians. Fuelling the move is both the increase in high density living and gentrification of inner city and urban centres combined with society’s general obsession with wellness and “being your best”.
“It all bleeds into each other,” Mr Nucara says. “Fine tuning your body and making yourself look and feel good is a necessary part of life now.”
The new breed of retailers is changing the face of the high street strip into more of a “neighbourhood village-style” area Mr Nucara says, with legal and financial service providers also now being seen among the tenant base.
While the trend and subsequent fall in vacancies is occurring faster in some places than others, it is only a matter of time before it takes hold across the board, Mr Nucara says.
In the Melbourne traditional retail strip of High Street Northcote for example, food and beverage outlets have declined slightly in the past year but been replaced by service retail like beauty clinics and fitness studios. Bridge Road in Richmond once plagued by vacancies has seen a marked turn around with empty stores now filled by service retailers such as lawyers, medical, health and skin-care clinics, dentists, optometrists, masseurs, fitness studios and gyms according to estate agency Fitzroys.
In contrast sections of Chapel Street are still languishing but not for long, Mr Nucara forecasts. “We have seen Chapel Street Windsor, Chapel Street Prahran and Chapel Street South Yarra steadily record rising vacancies over the last three years with a total 33 recorded in 2016, 44 recorded in 2018 and a total high of 55 today,” Mr Nucara says. “There is a ground quake shift at street level, with Chapel Street being an indicator of future retail trends, and we can see similar trends in other locations such as in Sydney’s Oxford Street.”
Steffan Ippolito, agent with Sydney’s Oxford Real Estate Agency, has leased commercial property on Paddington’s Oxford Street for almost 20 years. In the same way Melbourne’s high street retail is morphing, he says Oxford Street, once the city’s mecca for luxury clothing labels, is also on the upswing of the vacancy bell curve with a different style of tenant.
“There are now more retailers such as lifestyle stores, homeware showrooms, medical providers, galleries and major banks,” Mr Ippolito says. “It’s helped that rents have come back to a level where retailers like furniture showrooms are now here as their customer base would prefer to go to Paddington than out to more industrial areas. Landlords have finally adjusted their rents to the shifting nature of the tenants.”
While Melbourne’s Chapel Street may still have some way to go, it too like Sydney’s Oxford Street has seen a “recalibration of rents across the whole shopping precinct” Mr Nucara says, although some have held steady. Significantly, much of the current construction work that has contributed to vacancies is nearing completion and will in time transform the street.
“There is no doubt major construction of important projects is hindering the customer experience in places like Chapel Street,” Mr Nucara points out. “They suck the life out of a precinct while they’re being developed make leasing vacant space more challenging.
“Yet I believe we will see a massive resurgence in Chapel Street in two or three years as the major construction and developments come online and the market quickly corrects itself. This is just a short-term transitional phase, as the new planned works will add much to the vibrancy, style and attractiveness of the neighbourhood.”