‘Ghost Shops’ – is the problem oversupply or a lack of imagination ?

ABC news has reported that ghost shops haunt new apartment blocks as a 'perfect storm' hits suburban retailers.

The default development solution in Melbourne is to create poorly designed small ‘retail spaces’ at the ground level of every apartment building. This is bound to result in many failed storefronts, especially those that are are in the wrong places to ever succeed.

It’s hard to be surprised really.

Yet the ABC description of there being a ‘oversupply of retail space’ is only a partial explanation of what is really going in.

First, there is the question of location. Is the location one that has the right fundamental characteristics to support retail uses ? If not then the ground floorpsace should be designed to support alternative commercial or other uses.

Second, were the rental returns assumed in the original development feasibility realistically set from the outset? If the original development feasibility assumed a ‘high street’ retail rent in a location that was never going to support that return then it is hardly surprising that this issue arises. As the ABC article suggests there may also be issues with developers being locked in to (or being reluctant to lower) unrealistically high rental expectations. I expect that almost every commercial space in an activity centre context could be occupied if the rents were affordable enough.

Third, there is the question of design. Are the spaces functionally designed to support retail or other uses ? Simply building and subdividing ground floor spaces into a series of small retail spaces with glazed facades locks the developer into a very narrow range of tenant options. It’s a high risk strategy in many instances.

Lastly there is the question of really knowing the local market and curating the design, presentation and management of the spaces to match local demands. Too often a developer will just construct a series of storefronts at the ground floor (because it satisfies Council’s requirements for active frontages) and then hope that someone will take them up at the asking price.

Echelon Planning operates a cowork space in Brunswick just around the corner from the large apartment complex featured in this ABC article. The complex is on a busy road, 50m from a train station and from Sydney road and it is right next door to a supermarket. It is opposite a café and a soon to be redeveloped large pub and live music venue.

The problem with the commercial space in this building is not its location, but rather its design and presentation.

For the past two years we have looked at it and wondered how different the outcome might be if the developer had taken a different approach.

Two thirds of the retail spaces are physically separated from the adjoining carpark and supermarket. You literally cannot walk directly between them to the supermarket entry because there is a level separation and continuous fence separating the two sites.

Many of the retail spaces are small and have poorly defined entries and some even have internal pillars and service ducts positioned awkwardly in their front facades.What if the spaces had been designed differently?

What if the development was properly integrated with its neighbouring sites ? What if the storefronts adopted a bolder and more distinguishable façade design?

Perhaps the ground floor could have been initially retained as a single large flexible space and then created into smaller sub-tenancies that were managed and marketed for a mixture of coworking, food and beverage and bespoke retail activities.

The whole space might even have been curated as a contemporary market operating under a single ‘made in Brunswick’ local brand?

Having been in Brunswick for almost 7 years, we have seen new and interesting businesses open up every month – bars, cafés, restaurants, breweries, deli’s, wineshops, coffee roasters, yoga studios etc. Yet with one exception, none have elected to occupy this building.

There are no shortage of opportunities to fill commercial spaces in locations like this. It just takes a bit more patience and imagination than the default solution of subdividing generic space and putting up the for lease signs. A large commercial space such as the Brunswick example lends itself to something creative and inspiring.

Perhaps even something that might need to start its life operating from a low rental base but that can grow and create value for the place over time.