Food, glorious food: Artist's impression of Shelley Lane at Barangaroo South.

Food, glorious food: Artist's impression of Shelley Lane at Barangaroo South.

Hipster restaurants, those cool places to eat and be seen, are the new kids on the block that are making rent for city retail properties more expensive.

The trend has gathered steam in Melbourne, leading to a fall in central business district (CBD) vacancy to a very low 1 per cent. As a consequence, the high demand for prime space has led to a subsequent rise in rents.

The demand by customers for an ‘‘experience’’ when dining, is also attracting traditional stall operators from markets, such as at Prahran and the Queen Victoria site in Melbourne, into leasing CBD-centric bricks and mortar tenancies.

This is also causing a headache for the traditional apparel retailers, who are being pushed to the sides. There is also the opening of H&M and Emporium, which has attracted the international fashion brands and hence, the crowds.

Zelman Ainsworth and Cam Taranto, retail leasing managers at CBRE, Melbourne, said the entry of the food tenants had ‘‘revolutionised’’ the city precinct.

‘‘We have seen new groups, such as Huxtaburger, Charlie Dumplings, Miss  Chu and Soup Place, among many others, have all entered the Melbourne CBD, with more to follow,’’ Mr Ainsworth said.

‘‘These hipster restaurants are popular as they provide a point of difference and an experience, which is what consumers now want.’’

Mr Taranto said the high demand has kept a lid on vacancies and increased rents across the core of capital cities.

He said the demand is also seeing these outlets look for multiple leases as their popularity increases.

Mr Ainsworth added that market stall holders are also moving into traditional CBD laneways and other space, which was once the domain of apparel retailers.

‘‘Simply Spanish and Koyhas come from the South Melbourne and Queen Vic markets and are looking at kiosk-style leases at the new St James area in Collins Street,’’ Mr Ainsworth said.

‘‘The inflow of the new international brands and opening of the centres, such as Emporium, has also reduced vacancy and we see that trend continuing.’’

In Sydney, the demand remains for apparel and the international brands, particularly in the City, but the new Barangaroo project will be the ''eat street'' of Sydney.

In all, the area, known as Barangaroo South Retail, is expecting 8.6 million people a year, to eat, drink, get a hair cut and promenade through the area, that is larger than the Queen Victoria Building.

Leasing agents say it will rival Chinatown for the variety of sized offerings in prize locations along the waterfront.

Lend Lease is developing the $6 billion project, which is at the western end of the City and will be a mixture of residents and financial industry office workers. It will include the new headquarters for Westpac, HSBC Bank, Pricewaterhousecoopers and KPMG. Law firms will also be present.

The estimated number of visits to the whole site, including the head land and indigenous centres is 18 million per year. 

Alex Alamsyah, senior director, retail leasing, Knight Frank, said he does not believe Sydney CBD landlords chase food retailers over apparel retailers, as the former can’t pay prime rents in Pitt/George/King/Market and Martin Place.

‘‘But they are taking secondary streets like York/Clarence/Kent Streets, as evidenced by the many small wine bars/cafes/restaurants in those streets,’’ Mr Alamsyah said.

‘‘However, food outlets are willing to pay the higher rents in George Street, with Starbucks and Gloria Jean's, paying about $400,000 to $500,000 per annum for 100-150 square metre sites. KFC and Hungry Jacks are paying about $1 million to $1.3 million per annum respectively, while at Circular Quay, for example, McDonald’s is paying about $1.2 million per annum for 250 sqm.''