Article | Adaptive Spaces
From Station to Precinct: How Retail Strategies Can Create Connected Communities
While Australia’s largest public transportation hub sees over five million visitors a month, securing the right tenancy in this iconic space requires a highly specialised approach.
December 5, 2024
Over five million visitors step inside Melbourne’s iconic Southern Cross Station every month. It’s an astonishing feat for a facility that first opened in 1859 and continues to operate as the gateway to Melbourne till this very day at over 160-years-old.
“Southern Cross is more than just a train station, it is a combination of a railway hub, bus terminal, food and shopping destination, drawing Australian and international visitors from all walks of life,” according to John Iozzi, General Manager of Southern Cross Station.
Standing as Australia’s largest public transportation hub today, the bustling station successfully links interstate, regional and suburban trains and coaches in Melbourne while providing access to Melbourne’s major airport, tram and taxi services.
It also connects people to the nearby 56,000-seat Marvel Stadium via the Bourke Street Bridge during the stadium’s 700-plus events held every year. All of this is bolstered with over 50 retail tenancies including fast food outlets, a supermarket, Asian hawker hall, a licensed premises and major carpark with 780 spaces.
“Southern Cross Station has an abundance of customer flow and foot traffic. It's not just for people who are catching the train, but all the office workers, residential properties and hotels surrounding it,” explains Jason Orenbuch, CBRE’s Director of Retail Leasing in Victoria.
Besides the scale differences, Southern Cross Station retains similar traits with other high-traffic precincts such as universities, which also attracts high foot traffic from people of diverse cultures and backgrounds.
This positions the station as more than just a conventional thoroughfare, but a precinct that serves an entire community around it.
Maximising the advantage of these factors for tenants and the landlord naturally requires proven leasing experience in this asset type.
CBRE were originally engaged to lease 15 retail spaces at Southern Cross Station in 2022. During the initial stages, a meeting was conducted between the Retail Leasing team and station management team. This key discussion focused on delivering a retail strategy plan that would see a revitalisation of the existing retail spaces within the space.
With KFC being identified as one of the target tenants from the meeting, the Retail Leasing team proceeded to engage with YUM! Brands, the firm behind KFC’s Australian site acquisitions. After facilitating numerous on-site meetings with YUM! Brands, the KFC franchisee and the architect and design teams, a successful deal was achieved in placing KFC into a dedicated food and beverage site in the station.
This considered approach demonstrates the importance of taking the necessary time to understand the unique elements of the property before engaging with tenants, a process that ensures that the most positive outcomes are delivered for all parties involved.
This requires the space to include everything from quick service retail to bigger national names that cater to all types of people – a distinct challenge for these types of property.
“Naturally, there’s a lot of interest when running an online campaign for leasing the station’s vacancies. The big challenge here is filtering through a lot of potential tenants to find the most ideal candidate,” says Jason.
Some of the tenancies negotiated by CBRE over the past two years include several quick service retail stores alongside the Asian food market precinct which has demonstrated capital to expand.
Larger multinational food groups have also consistently shown an interest in taking up space in the station with KFC having secured 135sqm of space on the ground floor concourse. Other successful deals completed include Puzzle Coffee, Daniels Donuts, Kwafood and Dropout Chaiwala, all tenants that have looked to the Melbourne CBD for further network expansion.
“We've got long term relationships with the retailers we have put in the station,” says Jason.
“There's a lot of trust with tenants. It has been a journey of trust with landlords and educating them on where the market is. We give them constant feedback on the ever-changing market conditions including the effects of flexible working trends that have impacted the CBD. We also lean on CBRE’s internal research, sector experts, our mapping team and different aspects of our business.
“This allows us to help shape their decisions about their property portfolio and provide clarity around their future.”
In 2023 alone, CBRE completed seven deals at Southern Cross Station, contributing to the circa-70 tenancies that Jason’s retail leasing team successfully negotiated across the city of Melbourne.
“If you put a AAA tenant in one space, other quality tenants will seek to surround it. A perfect example is KFC, which is currently turning over huge numbers with the station patrons. That has definitely helped us with neighbouring vacancies and it confirms that putting in place quality or money-generating tenant will attract others to follow suit. They will capitalise on the increase in foot traffic.”
The conversation around ROI doesn’t just deliver on the financial front, but also benefits the broader community while bolstering the station’s future.
“Previously there were vacancies and tired operators from the Covid fallout,” explains Jason. “This meant that the reason for its reinvigoration was even more important. These leasing deals fundamentally strengthen the asset which is the first look and feel of Melbourne’s CBD when travellers arrive to the station via the different modes of transport.”
This ROI naturally evolves to add strength to the Melbourne CBD’s economy.
With the city’s new Metro Tunnel set to open in 2025, five new underground stations will also be delivered. This will be the first step towards a metro-style rail network featuring proven 'turn up and go' train services seen in major cities like London, New York and Singapore.
Can CBRE’s successful tenancy results from Southern Cross Station be replicated at these upcoming train stations?
“We’re already working on the above ground train station at the corner of Flinders and Swanston Street,” says Jason.
“We'll be taking our learnings from Southern Cross Station there as well. There's a lot of tenants we've done deals with at Southern Cross Station who want to move to the new station site. We’re finding that once tenants see success in one precinct, they have a greater appetite to move and grow in a similar one.”
Beyond train stations, the blueprint for retail leasing success across different high foot traffic assets is a challenge that CBRE is more than capable of taking on.
“Whether it’s an airport or train station, every specific precinct and landlord will have their own rules and frameworks to abide by,” says Jason.
“We know this because we're starting work on the retail leasing for a university precinct in the Docklands with a leading University. We're preparing to evaluate the landlord's requirements and then we’ll come up with a bespoke strategy tailored to the area and community.”
From major transport hubs to office and educational precincts, our depth of experience in retail leasing will maximise the potential of your greatest asset.
“Southern Cross is more than just a train station, it is a combination of a railway hub, bus terminal, food and shopping destination, drawing Australian and international visitors from all walks of life,” according to John Iozzi, General Manager of Southern Cross Station.
Standing as Australia’s largest public transportation hub today, the bustling station successfully links interstate, regional and suburban trains and coaches in Melbourne while providing access to Melbourne’s major airport, tram and taxi services.
It also connects people to the nearby 56,000-seat Marvel Stadium via the Bourke Street Bridge during the stadium’s 700-plus events held every year. All of this is bolstered with over 50 retail tenancies including fast food outlets, a supermarket, Asian hawker hall, a licensed premises and major carpark with 780 spaces.
A unique space where retail, diversity and culture meet
“Southern Cross Station has an abundance of customer flow and foot traffic. It's not just for people who are catching the train, but all the office workers, residential properties and hotels surrounding it,” explains Jason Orenbuch, CBRE’s Director of Retail Leasing in Victoria.
Besides the scale differences, Southern Cross Station retains similar traits with other high-traffic precincts such as universities, which also attracts high foot traffic from people of diverse cultures and backgrounds.
This positions the station as more than just a conventional thoroughfare, but a precinct that serves an entire community around it.
Maximising the advantage of these factors for tenants and the landlord naturally requires proven leasing experience in this asset type.
CBRE were originally engaged to lease 15 retail spaces at Southern Cross Station in 2022. During the initial stages, a meeting was conducted between the Retail Leasing team and station management team. This key discussion focused on delivering a retail strategy plan that would see a revitalisation of the existing retail spaces within the space.
With KFC being identified as one of the target tenants from the meeting, the Retail Leasing team proceeded to engage with YUM! Brands, the firm behind KFC’s Australian site acquisitions. After facilitating numerous on-site meetings with YUM! Brands, the KFC franchisee and the architect and design teams, a successful deal was achieved in placing KFC into a dedicated food and beverage site in the station.
This considered approach demonstrates the importance of taking the necessary time to understand the unique elements of the property before engaging with tenants, a process that ensures that the most positive outcomes are delivered for all parties involved.
Evolving strategies for an evolving space
The high-profile status of Southern Cross Station alongside the expectations of the community means that finding the right tenant mix is paramount in creating a successful precinct.This requires the space to include everything from quick service retail to bigger national names that cater to all types of people – a distinct challenge for these types of property.
“Naturally, there’s a lot of interest when running an online campaign for leasing the station’s vacancies. The big challenge here is filtering through a lot of potential tenants to find the most ideal candidate,” says Jason.
Some of the tenancies negotiated by CBRE over the past two years include several quick service retail stores alongside the Asian food market precinct which has demonstrated capital to expand.
Larger multinational food groups have also consistently shown an interest in taking up space in the station with KFC having secured 135sqm of space on the ground floor concourse. Other successful deals completed include Puzzle Coffee, Daniels Donuts, Kwafood and Dropout Chaiwala, all tenants that have looked to the Melbourne CBD for further network expansion.
Building trust to build real communities
“We've got long term relationships with the retailers we have put in the station,” says Jason.
“There's a lot of trust with tenants. It has been a journey of trust with landlords and educating them on where the market is. We give them constant feedback on the ever-changing market conditions including the effects of flexible working trends that have impacted the CBD. We also lean on CBRE’s internal research, sector experts, our mapping team and different aspects of our business.
“This allows us to help shape their decisions about their property portfolio and provide clarity around their future.”
In 2023 alone, CBRE completed seven deals at Southern Cross Station, contributing to the circa-70 tenancies that Jason’s retail leasing team successfully negotiated across the city of Melbourne.
The return on investment of quality tenants
Recognisable brand names matter when it comes to maximising tenancy in commercial spaces that share a similar blueprint to Southern Cross Station.“If you put a AAA tenant in one space, other quality tenants will seek to surround it. A perfect example is KFC, which is currently turning over huge numbers with the station patrons. That has definitely helped us with neighbouring vacancies and it confirms that putting in place quality or money-generating tenant will attract others to follow suit. They will capitalise on the increase in foot traffic.”
The conversation around ROI doesn’t just deliver on the financial front, but also benefits the broader community while bolstering the station’s future.
“Previously there were vacancies and tired operators from the Covid fallout,” explains Jason. “This meant that the reason for its reinvigoration was even more important. These leasing deals fundamentally strengthen the asset which is the first look and feel of Melbourne’s CBD when travellers arrive to the station via the different modes of transport.”
This ROI naturally evolves to add strength to the Melbourne CBD’s economy.
Benefits of securing the future of Southern Cross Station
With the city’s new Metro Tunnel set to open in 2025, five new underground stations will also be delivered. This will be the first step towards a metro-style rail network featuring proven 'turn up and go' train services seen in major cities like London, New York and Singapore.
Can CBRE’s successful tenancy results from Southern Cross Station be replicated at these upcoming train stations?
“We’re already working on the above ground train station at the corner of Flinders and Swanston Street,” says Jason.
“We'll be taking our learnings from Southern Cross Station there as well. There's a lot of tenants we've done deals with at Southern Cross Station who want to move to the new station site. We’re finding that once tenants see success in one precinct, they have a greater appetite to move and grow in a similar one.”
Beyond train stations, the blueprint for retail leasing success across different high foot traffic assets is a challenge that CBRE is more than capable of taking on.
“Whether it’s an airport or train station, every specific precinct and landlord will have their own rules and frameworks to abide by,” says Jason.
“We know this because we're starting work on the retail leasing for a university precinct in the Docklands with a leading University. We're preparing to evaluate the landlord's requirements and then we’ll come up with a bespoke strategy tailored to the area and community.”
From major transport hubs to office and educational precincts, our depth of experience in retail leasing will maximise the potential of your greatest asset.
