The typical ‘high street’ shopping strip is really now becoming a neighbourhood village where the traditional retailers of fashion-related businesses (clothes, accessories, handbags, jewellery, etc) are really no longer viable to due online retailing and the choice offered at shopping centres.
This is most evident in legendary fashion destinations, where fashion shopping streets such as Chapel Street have reigned supreme for 30-plus years but are now in decline with systemic vacancies.
We have seen Chapel Street Windsor, Chapel Street Prahran and Chapel Street South Yarra record a steadily rising number of vacancies over the last three years with a total 33 recorded in 2016, 44 recorded in 2018 and a total high of 55 today.
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.
This is largely due to our society and community generational shifts which have occurred over the last five years, with greater population density due to the development of multi-level residential apartment projects, especially within the inner circle CBD ring, which continues to be rapidly gentrifying.
Over time, businesses inevitably evolve and change due to customer sentiment and spending habits, which nowadays are often influenced by social media hype. These fluctuating needs and wants have made customer loyalty a great challenge for retailers, hence the growth of loyalty programs, points, membership cards and the like.
The next wave of businesses will be associated with hospitality and well-being. We have seen the rise of high-quality eateries, cafes, gourmet grocers, wine bars and restaurants in neighbourhoods. This is particularly evident in Chapel Street Windsor and Smith Street Collingwood, which have both become white-hot dining destinations.
I believe our community has been swept up by the Masterchef/MKR effect, whereby celebrating food around our ‘villages’ is important. Whether it is the weekend avo-brekky, organic wholesome foods or unique dinner experiences, consumer demand will continue to grow.
Therefore, we expect to see more restaurant/bar concepts, both locally and internationally, absorbing more of the commercial space in the neighbourhood village.
Additionally, as we begin to cluster, work and live around transport centres and villages, we require “human services” for well-being and daily care close by.
The wave of new massage, physio, pilates, yoga, fitness, general well-being, health and beauty businesses will begin to occupy much of the typical retail once dominated by fashion-related groups.
Moreover, we may also begin to see financial and legal service businesses lease traditional retail space to accommodate the growing needs of the local village.
The decline of the traditional fashion retail model and the rise of hospitality (food and beverage) and well-being services can be attributed to many factors in the local area, including:
- Major construction and development of important projects hindering the customer experience in an area (Chapel St)
- Landlords not acknowledging the re-calibration of the commercial retail market and asking unrealistic rents (Centre Rd Bentleigh and Chapel St)
- Construction of rail under/overpasses around business villages, therefore hindering traffic flow and customer parking
- Government levies and taxes
- Rising operational costs in a business such as penalty wage rates, specifically over public holidays and the weekend
- Local government planning laws
To conclude, 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.
From a commercial leasing perspective on a macro level, there are opportunities to target new styles of business that are more human service and hospitality-focused, as they better serve the needs of the new communities in which they reside.