Activity Returns To The Melbourne CBD, And So Does Retail Leasing

Posted on 27th June 2022

Activity is returning to the Melbourne CBD and retail leasing activity is tracking its path, with Fitzroys completing multiple deals this month.

Fitzroys’ James Lockwood, Franklin Gikas and Travis Keenan have just negotiated leases at Shop 3, 237-239 Flinders Lane, 10 Howey Place and 347A Little Collins Street..

On Flinders Lane, Bent-Oh! will open its second Melbourne store, following its successful first location in South Yarra that opened three years ago. It committed to a long 5+5-year deal at $40,000 per annum.

The new CBD outlet will have a similar focus specialising in bento boxes, highlighting fresh and quality ingredients coupled with fast service, with an emphasis on targeting time-conscious CBD office workers on their break. The parent company also operates specialty coffee and sandwich bar Bad Eggs in South Yarra, and has been running specialty coffee and salad bar Café Augusta in St Collins Lane.

Union Kiosk - one of Melbourne’s smallest and most sustainable cafés - is upsizing to 10 Howey Place after outgrowing their current CBD location. The 3+5-year lease was struck at $35,000 per annum. Union Kiosk serves 100% vegan jaffles, coffee and sweets, and operates efficiently with zero waste through reuse, recycling and composting.

“Union Kiosk has been operating in The Causeway for the past five years and has stayed operational throughout COVID lockdowns,” Gikas said. “Having survived the period with a strong performance, owners Rogan and Tatum thought it was time to move into a bigger location, while still being located off the beaten track, reflecting the success they’ve enjoyed in this part of the CBD.

“CBD laneway offerings remain a quintessentially ‘Melbourne’ experience.”

On Little Collins Street, Sulwha Desert Bar will open a permanent offering on a 5+2-year lease at $68,500 per annum. It had successfully operated a pop-up concept in Little Bourke Street between 2020 and 2021 and having built a strong customer following, the team thought it was a great opportunity to find a location to set up shop for the long-term. Sulhwa specialises in Asian-style deserts and in particular milk ice-flakes and cakes.

“Located close to the corner of Elizabeth Street and Little Collins, the high foot-traffic and lack of desert offering in the area were main drivers for the pop-up locking in a long-term location here,” Keenan said.

Lockwood said it is telling that all of the operators have had immediate experience in the CBD.

“We’re again seeing businesses prepared to make bigger commitments. The lease terms show tenants are confident in the CBD and are in it for the long haul,” he said.

“The CBD is slowly coming back to life. There is confidence in the uptick of day-to-day trade with foot traffic throughout the week and office occupancy both on the way up, and overall tenant enquiry and confidence in recent weeks is growing in line with that.”

City of Melbourne pedestrian traffic data shows night-time activity is up across the CBD’s dining precincts, and weekend visitation throughout the Grand Prix, Comedy Festival and over the early part of the footy season was recorded at higher than pre-pandemic levels.

Lockwood said properties that have existing an fit-out and are in the 50 to 100sqm range are currently the most desirable in the CBD retail leasing market.

“Hospitality operators have dominated retail leasing enquiry over the past two years. Food and beverage businesses were able to keep trading while the pandemic presented opportunities for businesses to enter the CBD market that previously wouldn’t have considered it, with an eye to a future rebound in activity.

“We’ve seen a big influx of interstate and outer-suburb operators looking to make a mark in the CBD.”

All three annual lease rates were inclusive of outgoings.