Service offerings are playing a growing role in Melbourne’s retail landscape, from traditional suburban strips to town centre-style precincts, and locations with strong growth prospects are a drawcard for tenants.
Among the latest deals, Fitzroys Agency Executive, Lewis Waddell, has negotiated two leases at 1056 Plenty Road, Bundoora, within the Polaris Town Centre in Melbourne’s northern growth corridor to a laundromat and a nail and beauty salon.
The laundromat has leased the 94sqm space on a long-term 6+6+6-year deal at $48,000 per annum plus outgoings and GST. Their fit-out is being undertaken by turnkey solutions firm Your Laundry.
L2 Nails Salon has leased the 107sqm space at $55,000 per annum plus outgoings and GST on a 4+4-year term.
Waddell said the property was originally a retail space of around 200sqm, but the high volume and type of enquiry received prompted Fitzroys to advise to the owner to split the space into two smaller tenancies.
“The move has paid off quickly, which reflects the demand for smaller format service retailers,” he said.
Polaris is home to around 500 dwellings, a number set to increase to more than 1,100 apartments and townhouses, while La Trobe University - the southern hemisphere’s largest university catering for more than 40,000 students and staff - is currently constructing a new $100 million student accommodation building of 624 units as part of a long-term $5 billion upgrade of the campus.
Polaris is the closest retail precinct to La Trobe University, while Springthorpe and Lancaster Gate residential estates also adjoin Polaris.
“Vacancy is now minimal across Polaris, reflecting the appetite businesses have for finding locations in vibrant areas of Melbourne with huge growth prospects,” he said.
Waddell said L2 Nails has existing operations in the busy CBD and the blue-ribbon suburb of Malvern, and identified the new space as ideal for its expansion and for the growth of its business, in line with the growth of the younger neighbourhood and catchment.
He said Melbourne shopping strips have recently seen a shift towards service retail, and offerings such as medical clinics and health services, dentists, optometrists, hair and beauty salons, laundromats and gyms.
“They are now a staple of retail precincts across the suburbs as well, with the trend seen in the planning and enquiry for retail spaces in Melbourne’s newest communities.
“Services have joined hospitality operators in increasing their presence throughout shopping precincts across Melbourne in recent times. It remains difficult for the online world to replicate those types of offerings.”
According to Fitzroys’ Walk the Strip report, the 2018/19 period saw a broad increase in the proportion of service retailers across Melbourne’s shopping strips, with 85% of the 33 surveyed precincts showing an increase. This compared to around 15 of strips showing increases in the proportion of specialty retail, and eight strips had an increase in food and beverage representation.
Waddell, with Fitzroys colleagues Chris Kombi and Terence Yeh, has just sold an exceptional retail investment within the Polaris Town Centre for $2.6 million under the hammer. According to research house .id, the Bundoora-McLeod area alone is in the midst of a population surge, currently at a very high 4.35% per annum, and which is forecast to remain above Greater Melbourne’s nation-leading rate until at least 2026.