Glamour shops around Collins St to hit tenants with steep rent hike

RETAILERS around Melbourne’s Collins St are set to be slugged with steep rent hikes as brands clamour for sought-after store space.

The Block Arcade. Picture: Jay Town

RETAILERS around Melbourne’s Collins St are set to be slugged with steep rent hikes as brands clamour for sought-after store space.

Property experts say demand for the historic Block Arcade and nearby Collins St stores is expected to drive rents up by a massive 30 per cent as leases come up for renewal.

“The Block Arcade is very tightly held and demand is very strong,” Colliers International Melbourne CBD retail leasing manager Ben Tremellen said.

“There’s not much opportunity and there’s a list of retailers lining up to get into The Block, so the rents will drive up.”

Mr Tremellen said the estimated 30 per cent spike in rents was a significant increase, but reflected the demand from high-end retailers desperate to get a slice of the CBD’s revamped shopping scene.

“A lot of people are coming into the market and it’s starting to create some competitive tension, including in the Block Arcade,” he said.

“There’s virtually zero per cent vacancy around those streets and there’s huge pressure on new tenants to come in and pay what the landlords are asking.”

The Block Arcade, which is home to 27 retailers including the popular the Hopetoun Tea Rooms, has come under particular scrutiny after changing hands earlier this year.

Private property moguls the Cohen family bought the 1890s shopping gallery from the Kearney family for an estimated $100 million in April.

The Cohen family settled the deal on Friday, with a new manager starting at the centre on Monday.

With the Block Arcade perfectly positioned near Australia on Collins — currently undergoing a $200 million makeover — and the flagship Myer, David Jones and H&M stores in Bourke St, tenants are bracing themselves for rent hikes.

“It’s a prime location and the sort of property where people are queuing up to get in, so when leases come up we expect they’ll be aggressively pursued,” one Block Arcade insider said.

But Cohen family spokesman Pat Barnes, director of property group Allard Shelton, rejected suggestions of excessive rent rises.

“It’s grossly wrong to say that since the Cohen family have taken control, they are putting up all the rents,” Mr Barnes said.

“Any property at any time has a sprinkling of tenants up for renewal. There’s a market and any owner is entitled to get a return on their property.”