Open for Business: A Commercial Property Market Update

After months of rising interest rates, increased construction costs, and shifting employee mindsets, the Pace Commercial team has noticed significant shifts in the way Melbourne does business. We asked our Commercial Manager Sam Fogarty to share some of the current and projected trends surrounding Melbourne’s commercial property market.

A growing demand for unique buildings with quality amenities.

Melbourne professionals are seeking additional entitlements as an incentive to return to the workplace. From gym memberships to café perks, parking and ease of access to arterials and transport, employees are challenging business owners to provide more bang for their hard-earned buck; a trend driving higher demand for quality commercial amenities. With executives at ASX-listed companies like Commonwealth Bank and NAB mandating the return, we expect medium and small businesses to follow suit.

“Creating a functional tenancy mix allows employers to use their office spaces as a means of attracting and retaining talent. Pace proactively targets hospitality and retail groups that complement our office spaces to add additional value to building occupants,” says Sam.


A convergence of retail and office spaces.

The Commercial team is seeing a high demand for retail and hospitality opportunities within mixed-use developments, and tenants are increasingly looking to join a diverse mix of businesses under strata buildings. Office workers bring foot-traffic and hospitality operators offer convenience, thus creating a complementary collection of business, retail and hospitality. The team has recently leased 95% of tenancies at 160 Whitehorse, achieving this balance at our largest completed residential and commercial project to date.

Comprising 17 retail shops and two office tenancies over 1,500 sqm, Pace of Blackburn is home to Sapore Blackburn, a new café, restaurant and bar, as well as Jellis Craig Real Estate, Uniting offices, UBX Training, Talons Nail Salon, a local dental practice, and Japanese izakaya restaurant, Daiku. The final office tenancy at 160 Whitehorse is now leasing, click here to enquire.


Prime opportunities for established retailers.

Despite challenges to the current commercial landscape, retail tenants are beginning to rejoin the market. The Commercial team is seeing a rise in competition among tenants, due to increased opening patronage and development density. Where smaller businesses are downsizing and shifting towards click-and-collect style services, established operators are securing advantageous tenancies with experienced developers.

With the RBA putting a pause on interest rates for the July period, we project that business confidence will gradually bounce back with a growing momentum in retailer migration. While inflation has influenced a decrease in general retail spending, it has had the opposite effect across the hospitality, beauty, wellness and fitness industries; a promising insight into the types of operators that developers seek.


The Melbourne retail market is as resilient as they come.

Delivering 100+ projects over the last 30 years, Pace has witnessed all kinds of market cycles, but one thing remains the same; we’re still seeing a strong demand for our retail and hospitality spaces that offer an optimal mix of location, amenity, density and tenancy. In selecting retail tenants, we focus on those that reflect and respond best to our resident profile and demand, curating a thoughtful mix to support both established and emerging businesses.

Discover more about our current and completed commercial opportunities here.

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