Restaurant deals driving up Flinders Lane rents

23 Jan 05:11 PM
Larry Schlesinger - Financial Review
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Top restaurateurs are flocking to Melbourne's most popular city dining precinct, Flinders Lane in the city centre, putting pressure on rents.

The famous late-night laneway, which runs parallel to and feeds off the Paris-end of Collins Street, is home to the city's trendiest dining establishments and retail boutiques from Spring Street at the top all the way down to Elizabeth Street.

Top restaurants already on the strip include Coda, Cumulus Inc, Lucy Liu, Tonka, Pastuso, Meatball and Wine Bar and Fonda Mexican.

In the latest in a series of deals, one of Melbourne top restaurateurs, Chris Lucas, has inked a new leasing deal for a  basement space at 175 Flinders Lane. The eight-level building is owned by philanthropist Helen Sykes, the wife of AFL chairman and former Carlton premiership winning captain Mike Fitzpatrick.

A spokeswoman for The Lucas Group, which operates the well-known Chin Chin restaurant and GoGo Bar at 125 Flinders Lane, confirmed a new Japanese-style restaurant would open at 175 Flinders Lane in May.

In a separate deal, an award-winning Melbourne restaurateur has secured a 160sq m retail space at 88 Flinders Lane at the back of high-rise tower, 101 Collins Street. CBRE Victorian leasing director Zelman Ainsworth confirmed the deal but would not comment on the identity of the tenant.

Mr Ainsworth said rents on Flinders Lane ranged from $700 to $1200 per sq m and were rising due to a lack of available space and the appeal of laneways, basements, roof tops,  arcades and other off-beat locations as settings for new trendy restaurants.

 

Sought after

The recently opened 1400sq m multi-venue Garden State Hotel, which sprung out of the legendary Rosati's restaurant site at 101 Flinders Lane, was paying annual rent of more than $1 million a year.

Other recent leasing deals on Flinders Lane include luxury menswear store Masons opening a 430sq m boutique at 167 Flinders Lane. The five-storey building is owned by power business couple Carol and Alan Schwartz, members of the wealthy Besen family, who control investment fund Trawalla Group.

Another recent opening was Danish steak house Beefstouw at 22 Duckboard Place, a laneway off Flinders Lane.

A retail and hospitality report released last year by the City of Melbourne and the Victorian government said the sector contributed $5.5 billion to the city's economy with spending on food rising 32.8 per cent in 2016.

According to the report, more than 1200 new retail and hospitality establishments have opened in the city since 2013, taking total floor space to nearly three million square metres.

"The pocket of Flinders Lane between Russell Street and Exhibition Street has become Australia's most sought-after retail location for hospitality operators, with very limited space and high rentals being achieved," Mr Ainsworth said. "Tenants are looking to expand in the new pockets of the CBD that can accommodate 200 to 500sq m venues," he said.

Andy Mullins, co-owner of Sand Hill Road, the hospitality group which owns and operates Garden State Hotel, said the Melbourne CBD hospitality offering has burst into life over the last few years and has now reached the kind level of cities like Berlin, London and New York.

"Flinders Lane itself has got to be considered one of the world's finest and most diverse food and wine precincts," he said.

Read more:
http://www.afr.com/real-estate/commercial/leasing/restaurant-deals-driving-up-flinders-lane-rents-20170123-gtwrp7