An unexpected spike in industrial land sales in Fyshwick in 2010-11 that lured national retailers to the suburb, has forced landlords to update older buildings and pushed high vacancy rates even higher.
The Land Development Agency sold more than $37 million worth of industrial land in 2010-11 in Fyshwick, greatly exceeding its targets.
Colliers ACT chief executive Paul Powderly said the vacancy rate would be at 20 to 25 per cent as businesses vacated old sections to occupy new buildings.
''A lot of people are taking the opportunity while their buildings are emptying out and negotiating new leases to upgrade Fyshwick, so they are relevant,'' Mr Powderly said.
''All we need now is some good, strong business sentiment and they will lease up.
''It's the small business heart of Canberra, so if there is activity and there are people moving in there, that's a good sign for people's confidence in the city.
''I would be happier to start seeing some of the vacancy taken up before I start calling it … we are a little way off running around and rejoicing it's all good yet.''
Barton Molloy Property partner Scott Molloy said national outdoor equipment companies such as Anaconda and Mont had opened in Fyshwick, selling high-end product, and they needed stores to match.
''[Floor space] in the older buildings is much cheaper but not up to scratch, so I think the smarter owners are seeing this as an opportunity to upgrade their premises,'' Mr Molloy said.
''They need to do it to secure national tenants and that's why you are seeing more new bakeries, new cafes, coming along with bike shops.''
Wetspot Watersports had moved into a rejuvenated former panel beating shop in Wollongong Street, King Furniture moved out of Townsville Street into new premises in Gladstone Street, the Good Guys moved out of Townsville Street into Barrier Street, and national pet store owners had moved to the suburb.
''You have seen people go into DFO and come back out, especially with furniture retailing,'' Mr Molloy said.
Barrier Street had become a furniture hub as landlords had spent money to compete in a tough market to secure new tenants.
''If you can make a premises look as good as new, and be 20 or 30 per cent under what a new premises needs in a rental return to be viable, it gives you an opportunity to secure those national tenants.''
Mr Molloy said that years ago retailers were prepared to spend money themselves updating their premises, nowadays business conditions were too tough.
National retailers were coming and looking to sign on for up to five years, but expected incentives.
''Some buildings have sat vacant for years because owners won't given an incentive,'' Mr Molloy said.