Melbourne suburban retail strip vacancies have declined to their lowest level in seven years, as  food and beverage operators and health and beauty retailers lead the recovery. 

BWP Advisors Founder Richard Jenkins said that Bridge Road, Richmond has the highest  vacancy of any retail strip with more than one in every five shops vacant. 

According to BWP Advisors’ analysis, the overall vacancy rate of Melbourne’s prime strips fell  from 11% to 8.6% over the past year. 

Mr Jenkins said that while the 2025 results provided hope that the worst for Melbourne’s prime  strips had passed, landlords and government authorities still need strategic help as retailers  continue to re-evaluate their real estate network to combat Australia’s current cost of living crisis. 

Mr Jenkins added that although the overall vacancy rate has fallen, only two individual strips  current vacancy rates sit below their respective 20-year average rates – Toorak Road, South  Yarra which fell from 10% to 4.6% and Church Street, Brighton which had the lowest vacancy of  all strips in this year’s analysis at just 1.7%. 

“Churn rates (movement within strips and tenants coming in) remain above average with BWP Advisors’ analysis revealing that the churn rate of 2025 was 20%, compared to the long-term  average of 7%. 

Cafes and restaurants were the most prominent type of incoming tenants across the strips and  continue to lead all other occupier types across all the strips, accounting for almost a third of all  shops. 

The vacancy rate of Melbourne’s iconic Chapel Street remains relatively elevated, albeit lower  than its peak recorded in the pandemic with its vacancy standing at 11%, well above its 20-year  vacancy of 7%. 

Mr Jenkins said that the Greens’ proposed 2% tax on all properties within metropolitan  Melbourne that have been empty for six months of the year is not necessarily the panacea to the  shopping strips’ ills with the importance of having an overall strategic approach to precincts more  effective. 

Mr Jenkins who also works with various Local Governments and landlords to assist them in  rejuvenating their precincts and shopping centres, said that the improvement of Acland Street, St  Kilda is one example of how a strategic approach to elevated vacancies helps precincts. 

The vacancy rate of Acland Street, fell to 5.8% in January 2025, significantly down from its peak  of 27% in 2023 when Mr Jenkins was engaged by the City of Port Philip to evaluate the tenancy  mix and work with landlords to reimagine their properties and target tenants. 

Mr Jenkins said that while successful retailers have always evolved to meet changing  consumers’ needs, increasingly precincts are becoming more diverse in their tenancy profiles  with service providers such as gyms, dentists and accountants along with health and beauty  tenants increasing their presence across the strips.

One other trend that BWP Advisors’ analysis revealed was the increased exposure of Op shops,  thrift stores and vintage clothing retailers operating across the strips.

Mr Jenkins said that there has been a shift toward minimalism, paired with more eco-conscious  consumers. Younger generations, namely Gen Z, even use this as a form of entertainment and a  way to cultivate a wardrobe that’s different which has led to an increase in the number of Op  shops across Melbourne’s strips. 

Martin Ginnane of Ginnane & Associates who worked in conjunction with Mr Jenkins to  reduce shopfront vacancies with a number of local governments said that, “globally, people’s  acceptance of thrifting is a reflection of some of the qualities that all generation are now finding  appealing: being environmentally conscious, sticking to a budget, having a keen eye for fashion  and standing out from the crowd. The desire to buy better, while still being on a tight budget, is  pushing the desire for discovery.” 

“Having monitored the strips for 25 years, the biggest change in the strips has been the growth of  services-based occupiers which now account for 21%of all shops and has now overtaken  Clothing and Footwear retailers, whereas 25 years ago, clothing accounted for 33% of all shops  in the strips,” Mr Jenkins said. 

“The changed consumer behaviour and limited resources underpins the need for landlords and,  occupiers to take innovative approaches to their long-term strategies. 

With e-commerce continuing to gather momentum, retailers have to come up with unique ways to  attract customers to precincts and brick-and-mortar locations and this comes with engaging  experiences,” he said. 

According to Mr Jenkins, Australian online retail sales have accelerated in recent years, having  grown by 20% over the past three years. 

“Online retail trade in Australia continues to gradually take a larger share of overall spending,  most recent data shows that online sales make up 13% of total retail sales with Australian online  sales with Australian consumers spending almost $50 billion online over the past 12 months.” 

Over the past year, retail trade increased across all Australia’s states and territories led by the  Northern Territory (+3.7%) followed by Western Australia (+3.3%) outperforming the annual  Australian growth of 2.2%. 

Retail trade grew across most sectors over the past 12 months, led by personal retailing (+5%)  and food (+2.6%) in contrast to household goods which contracted over the past year, reflecting  the slowdown in the housing sector and uncertain economic conditions. 

Outside of Melbourne, vacancies remain elevated in some of Australia’s iconic shopping strips  with vacancies in Oxford Street, Darlinghurst and Fremantle’s South Terrace shopping precinct  both recording vacancies more than 10%, more than double their long-term averages.

Melbourne Prime Retail Strip Vacancy – January 2025 Strip Jan-25 
Bridge Rd, Richmond 21.3% Chapel St, South Yarra 11.0% Burke Rd, Camberwell 10.5% Glenferrie Rd, Malvern 9.3% Clarendon St, South Melbourne 8.1% Glenferrie Rd, Hawthorn 6.6% Acland St, St Kilda 5.8% Puckle St, Moonee Ponds 5.5% High St, Armadale 5.5% Toorak Rd, South Yarra 4.6% Church St, Brighton 1.7%

TOTAL 8.3% Source: BWP Advisors 

Read more by BWP Advisors:

Australian CRE lending continues to evolve amidst changing market conditions | Commo.