The strip once lauded as Melbourne’s premier shopping area has hit struggle street.
Chapel Street, South Yarra, has at least 22 stores with "For lease" signs between Toorak and Commercial roads.
Retail sources say dwindling foot traffic – down at least 30 per cent over the past six months – and rents of up to $200,000 a year have led to a growing and unprecedented number of ghost stores along the strip.
Retailers are also being stretched between the revamped Chadstone and the new Emporium precinct in the city, which officially opens on August 20.
Luxury bag brand Oroton is the latest high-profile retailer, following celebrity Australia fashion designer Wayne Cooper, to vacate Chapel Street, closing its doors a fortnight ago.
The accessories label has signed a lease at Emporium but a spokesperson declined to comment on why it left Chapel Street.
Cooper shut his Chapel Street boutique about six weeks ago, ridding stock by selling red carpet gowns worth several hundred dollars for as little as $40.
Cooper said he was crippled by $18,000 a month in rent. He felt he should be paying $10,000 to $12,000 per month.
“They [the landlords] were too damn greedy,” he said.
“They want $200,000 or more a year [in rent] when those shops should be $100,000 in rent a year.
“I had to do the best [sales] figures in my life and it still would not be worth it.
“When it comes to fashion, the turnover can’t climb as quickly as property values. My rent was massive and climbing every year.”
Chapel Street isn't the first retail strip to fall victim to changing shopping trends. Bridge Road in Richmond has failed to recover after many long-standing tenants moved to DFO outlet centres around Melbourne.
But with city commercial vacancies at 1.75 per cent and tightening, Chapel Street rental prices dropping up to 15 per cent this year, and consumer confidence rising, fashion and real estate insiders expect retailers will soon spring back to Chapel Street.
Property sources say South Yarra commercial landlords are becoming more flexible to get deals done.
CBRE director of Victorian retail leasing Zelman Ainsworth said Chapel Street still had appeal for retailers unable to secure CBD space.
“Chapel Street is one of the best lifestyle precincts, it is well established and the enormous residential growth is going to further stimulate the precinct and create more long-term traffic,” he said.
“On the back of the success of the CBD and Chadstone, retailers are finding Chapel Street is a more a suitable and accessible option.
“International retail is yet to make a real stamp on Chapel Street, we expect that as they will compete for sites and as a result of that they will look for alternative locations, like Chapel Street.”
Chapel Street Precinct business development manager Oskar Cebergs admitted the strip has the highest volume of vacancies he has seen.
But he expects the street to have a second coming with the local population due to boom as high-rise apartment are built and $12 million worth of council capital works, including improved footpaths and lighting, are completed over the next eight years.
“Of course enclosed shopping environments are a competitor for us,” Mr Cebergs said.
“It has definitely been a challenging climate and ultimately that comes down to the economy and fashion e-commerce.
“For us it is divided at the moment – we have some struggling and others, like Topshop, performing well. They listen to their customers and they innovate to ensure that experience in store is memorable, so we can all learn from that.
Mr Cebergs said fashion brand Diesel recently signed a 10-year lease and pointed to West Elm, the US homewares juggernaut, which chose to open its debut Melbourne store on Chapel Street, as a sign of retailer confidence.
CHAPEL STREET – THE HIGH PROFILE COMING’S AND GOING’S
Topshop – British high street fashion giant
West Elm – Affordable US homewares chain
Marimekko – High-end Finnish fashion and homewares chain
Target Urban – Budget retailer’s first street-front store
Bonds – Aussie basics brand
Wayne Cooper – High-end Australian fashion designer
Cylk – High-end Australian fashion label
Oroton – Luxury Australian accessories brand
Christopher Chronis – Australian formalwear designer
Bettina Liano – Australian jeans queen