In The Brunswick Street vs Chapel Street Contest There Is One Clear Winner
When it comes to investing in retail property, consumer trends and public perceptions of hot spots are critical pieces of research to equip yourself with.
Although Chapel Street has had a long-held reputation as a golden retail precinct, the tide has been actively turning for a number of years as the southside property boom has seen the flow-on effect of untenable rental prices in retail, commercial and residential premises motivate savvy tenants and buyers to look elsewhere for a better investment of both time and money.
Meanwhile, the increasing popularity of properties north of the river means that there is still ample opportunity to explore the alternative shopping strip of eclectic, cosmopolitan Brunswick Street and its surrounds.
To understand the background of both retail hubs, it makes sense to look at a brief history of both areas in order to weigh up the potential pros and cons and analyse the clear winner.
- Compounding rental increases over the time of lengthy leases has pushed rentals to unsustainable levels, especially in the non-discretionary sector.
- With the development of key retail centres such as Emporium, St Collins Lane, the Chadstone redevelopment, Eastland redevelopment and Doncaster, mainstream fashion retailers took the opportunity to step out of Chapel Street and into these new and exciting hubs.
- Landlord incentives across these redeveloped and new centres were significant, with retailers concerned with their current rental levels relocating
- As a result, a vacuum was created in Chapel Street, where landlords’ rental expectations were based on a continuation of what amounted to around 10+ years of solid growth.
- With this shift, food retailers then migrated south along Chapel Street to Windsor, where rental levels and conditions were more favourable, as landlords were trying to establish and promote a competitive advantage in moving away from the “South Yarra” area of Chapel Street.
- Although a slightly different market, it can be compared.
- Demand for Brunswick Street is now increasing to the levels identified in the 2003-2008 period.
- Retailers and food operators are actively seeking to get back in to Brunswick Street, as well as the now popular and respected Gertrude Street
- Landlords are meeting the market and prepared to negotiate to attract and retain key retailers and offerings.
From our perspective, in the decision between purchasing or leasing property in Chapel Street versus Brunswick Street, the list of negatives related to the former fashion capital are currently too long to be ignored.
If property investment is about long-term, sustainable growth, choosing a suburb or region where there is still room to grow significantly is a better choice than investing into a suburb that has already reached its zenith.
Ownership of commercial and retail premises can be a fantastic alternative to investment in the residential market, but for it to work successfully, it relies on tenants who want to be in the area - and can afford to lease the properties to avoid long vacancies that don’t bring in any income for landlords.
With that reality at the forefront of sensible property investment decisions, smart investors keen to grow a commercial and retail property portfolio in a shopping strip that is primed and positioned for impressive growth, need look no further than Brunswick Street for a positive return on investment.
For more information about strategic investment property advice, contact CRS property today.
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