CBRE’s Zelman Ainsworth, who has negotiated several retail leasing deals over the past couple of months, said there had been a flurry of activity from new cafes, bars and restaurants within Melbourne’s inner-city retail hubs.
One of the most recent deals completed is the leasing of a 126sqm restaurant at 271 Bay Street, Port Melbourne by the Mediterranean Café Bar. The eatery took out a five year lease term on the property, with an initial rental of $555 per square metre annually.
Mr Ainsworth said over the past few months, there had been a push from high quality hospitality operators to expand in prime retail locations such as Port Melbourne, Windsor and South Yarra.
He remarked: “Hospitality outfits are showing renewed interest in Melbourne’s prime retail strips, with several big names looking to put down roots in the city’s top dining districts.”
Mr Ainsworth said South Yarra was also proving to be a popular dining destination, with the Beer Society recently taking out a five year lease on a 45sqm property at 3/9 Yarra Lane. The initial rental is $30,000 per annum.
Boutique café Two Dudes Kitchen recently struck a deal in the area, taking out a five year lease on a 70sqm property at 503 Malvern Road. The initial rent is $50,000 per annum.
The bustling suburb of Windsor has also seen a flurry of restaurant activity in recent months, with eatery Mr Miyagi committing to a five year lease on a 250sqm property at 99 Chapel Street. The rental is $100,000 per annum.
Susie Wong restaurant has secured a 180sqm property at 12 Chapel Street for a five year term at $37,500 per annum, while the Batch Café has taken out a five year lease on a 140sqm property at 78 Chapel Street.
Beller Real Estate’s Sam Fogarty said the sluggish retail market was driving more activity in the hospitality sector.
“With traditional retail shops struggling to pay the bills, there has been a large move towards converting these venues into cafes, restaurants and bars, predominately by experienced operators with multiple venues in the area,” Mr Fogarty said.
CBRE’s Cam Taranto said hospitality operators were starting to shift away from the laneway sites that have been in trend.
“Tenants are seeking more exposure and positioning themselves closer to precincts with longer trading areas such as bar and night spots,” Mr Taranto said.
Recent CBRE data shows the average vacancy rate in the city’s prime strips has lifted 0.74% to 6.10% since December 2012, with Burke Road, Puckle Street, Acland Street, Clarendon Street and Church Street the most tightly occupied areas.
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