After years of bad press, Wollongong's CBD may be about to turn a corner.
In fact, the city may be facing a shortage of ground floor commercial spaces, as new operators move into former retail spaces.
If current trends continue, Wollongong will have few ground floor commercial spaces left by the end of the year, according to recent data compiled by real estate agency Colliers Wollongong.
As of the beginning of May, there are only 48 ground floor commercial spaces available, equivalent to just over 10,700 sqm.
Kady Leggett, senior executive - investment services at Colliers Wollongong says the change has come off the back of trends that were amplified by COVID-19.
"People are going online instead of going into stores and COVID accelerated that because we had no choice," she said.
In addition, the character of the people visiting Wollongong CBD has altered.
"Because a lot of people were working from home, commuters that would kind of go from here to Sydney at four or five in the morning, we had that population back here in Wollongong," Ms Leggett said.
With a number of major apartment buildings completed in the CBD, the Wollongong CBD suffered less of the exodus of office workers that capital city CBDs, such as Sydney and Melbourne, experienced, as it has become a hub for locals seeking out goods and services. In addition, as traditional retail moved online, ground floor commercial spaces have begun to be filled by lifestyle, hospitality and service focused tenants.
One of those tenants is BFT Wollongong, which is about to open at 308-310 Crown Street.
Studio manager Skye Denton said the site, formerly a vascular surgery clinic, was surrounded by transformation.
"Particularly this side of town, there's a lot of apartments going up," she said.
While there were challenges in converting the space to its new use, with the floor having to be relevelled, Ms Denton said the new owners were able to secure attractive terms through leasing agent Colliers on the site that had been vacant for over a year.
Ms Leggett said that part of the change in the types of businesses that are now occupying the ground floor spaces has been a conversation with landlords about the rents that can be charged. While this shift would be priced into leases on new developments, for existing properties, landlords could see a reduction in rental rates by about 10 to 15 per cent.
"In order to get in and secure a tenant, owners need to look at the market and then they can realise that they need to meet the market," Ms Leggett said.
According to Colliers, in 2021 61 ground floor commercial spaces were leased in the Wollongong CBD, out of a total of 121 vacancies.
In a rebuke to suggestions that new developments in the Wollongong CBD do not need to include ground floor commercial spaces, the report from Colliers notes "There will be limited and low stock if new developments within the Wollongong CBD cease to include Ground Floor Commercial spaces".
As a new business to the region, the experience of Ms Denton and BFT is emblematic of the new tenants taking on ground-floor spaces, with 80 per cent of the businesses that moved into ground floor commercial spaces new to Wollongong.
Being in a prominent location has increased awareness of the business, with the Wollongong CBD site the first Illawarra iteration of the Melbourne-based fitness franchise.
"We've had a lot of people see our sign out the front and then come in just to have a look," Ms Denton said.
With more residential developments on the way for the Wollongong CBD, Ms Leggett said she expects fewer 'For Lease' signs in the front windows of shops in the heart of the city.
"We're now getting people living in apartments in the CBD, we need to be able to service that population."
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