Vacancy across Melbourne's inner-eastern strip retail has fallen to its lowest level in a decade. We look at who is driving the recovery and where rents go from here.
Vacancy rates across Melbourne's inner-eastern high streets have fallen to their lowest level in a decade. Strip centres that struggled through 2020–2023 are now recording multi-tenant competition for well-located shops, and face rents on the best strips have pushed past pre-2020 peaks.
The tenant mix driving the recovery is notably different from a decade ago. Hospitality remains the anchor, but the fastest-growing categories are health and wellness (allied health, Pilates and recovery studios), boutique grocery and specialty food, and service retail that e-commerce cannot displace — barbers, nail salons, pet care and repair services.
Demand is only half of the equation. Almost no new strip retail has been delivered in the inner east over the past decade, while population density in the catchments has grown steadily. The result is a structural undersupply: more households, more spending power, and the same number of shops.
We expect high-street rents in the inner east and inner south-east to keep grinding higher through 2027, with the strongest growth in strips anchored by daily-needs retail.
