Melbourne’s once-grungy Elizabeth Street is taking over from nearby Flinders Lane as the home of trendy, pared-back office conversions.
The street, long known for its adult shops, fast food outlets and motorbikes, is undergoing a slow renaissance as a new wave of upmarket ground-floor retailers move in and landlords begin to capitalise on vacant, unrenovated, upper floors in their buildings.
Over the past five years, older character-filled structures in Flinders Lane have been converted with funky industrial fitouts into sought-after office spaces targeting creative, technology and advertising businesses.
That trend now has spread to the southern end of Elizabeth Street.
The owners of 107 Elizabeth, listed as “notable” under Melbourne’s planning scheme, will renovate the building’s five upper floors, paring back the 400 square metre floorplates to expose the wooden floorboards and original ceilings.
“There is strong demand for interesting office space,” Fitzroys leasing director Rick Berry said. “They [the landlords] will take it back to floorboards, get rid of the suspended tile ceilings, strip it right back and upgrade all the services.”
Many older buildings on Elizabeth street have few or no tenants in the upper floors, which have often been left derelict for years.
“There’s still quite a few older buildings which have upper levels that are poorly used,” he said.
The historic Elizabeth Chambers building near Flinders Street station, which sold in March for $9.62 million, has five tenant-less upper floors infested with pigeons. Its lower levels are leased to a tattoo parlour and the marijuana-themed High Voltage City store.
Mr Berry said Officeworks, which occupies the ground floor at 107 Elizabeth, has renewed its lease for a further 10 years and committed to a full store refurbishment.
Its tenancy extends next door where it occupies both the ground and first floor.
The lease in both buildings was struck for about $900,000 a year, industry sources suggest.
Retail rents on the west side of Elizabeth sit about $2000 per square metre. On east side of the street they rise above $3000. Office rents for sought-after space are about $550 per sq m.
Recent retail tenancies include Kathmandu that last year opened a new store in the revamped Galleria centre, Athlete’s Foot, Minotaur, Optus, Typo, fashion retailer Roxanne, Cotton On Body, Michael Hill and a new premium fit-out Haigh’s Chocolates outlet.
Betty’s Burgers has opened in the former Laura Ashley shop at 101 Elizabeth Street paying rental close to $400,000 per annum gross on a 10-year lease.
Melbourne Council will move ahead with a $2.2 million conversion of the southern end of Elizabeth Street into a pedestrian mall early next year.