Vacancies on the rise in historic buildings as construction cuts foot traffic

For 15 years, Damien Nguyen has been selling banh mi from the corner of the Melbourne Building.

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“In terms of what it used to be before the construction, I’ve got to say at least 50 per cent reduction,” Mr Nguyen said.

Damien Nguyen in his Melbourne Building banh mi shop. Picture by Karleen Minney

“Of course we’re hoping things will get better. There’s no point in doing this and it’s not getting better. That’s sort of the optimism,” he said.

“For now, I just have to endure.”

Much of the scaffolding has come down around the Alinga Street light rail stop, but major construction around the site is not expected to be completed until early 2027. Testing of the track will take place throughout 2027, which is slated to start operating in 2028.

While Mr Nguyen is confident his bistro will survive the next 18 months, others in the Sydney and Melbourne Buildings have not been so lucky.

Owners spending savings

Venkatesh Ramachandran, a veteran of Canberra’s food scene, has been trying to sell or lease his shop in the Melbourne Building for a year, but said there was little interest.

“Most of the people who came and inspected it in the last 12 months have explained to us that because of the light rail situation they cannot take a chance on leasing it out or buying it,” Mr Ramachandran said.

He ran his own restaurant from the site for more than a decade before leasing the property out. One of the reasons the last tenant left was because of the light rail work, Mr Ramachandran said, leaving him with no income to pay the mortgage, body corporate fees or government rates.

“It’s draining my funds, my savings, the government is not supportive,” Mr Ramachandran said.

When prospective tenants did show interest, Mr Ramachandran said, they often asked for discounts due to the light rail work.

“Some real estate agents don’t even answer my calls or return my calls because they’ve got nothing to tell me. It’s quite frustrating.”

Shops empty in historic buildings

Real estate agent Paul Douglas-MacDonald from Knight Frank said the increasing vacancies in the buildings were not surprising “given the environment” they are in.

“It’s being pretty heavily affected by all the construction going on with the light rail and the new theatre,” Mr Douglas-MacDonald said.

“It’s a very messy time.”

There are currently four spaces for lease between the two buildings. A suite of offices in the Melbourne Building has just been leased after months on the market – the first since November last year.

One space is currently for sale in the buildings, but has been sitting empty for 12 months after the previous owner moved their storefront to Braddon.

Fencing disrupts business

“Visibility is obviously shocking,” Mr Douglas-MacDonald said.

“You can’t drive up and down a lot of London Circuit at all right now, and if you can, there’s a fence in the way, so retail is getting hit pretty hard.”

Many of the businesses were family-owned and could not afford to wait out the construction works, he said.

Mr Douglas-MacDonald is currently leasing two spots in the Melbourne building, and said many small businesses who were thinking of moving in had to consider whether they could survive until construction ends.

“They get it and they see the vision, but can they sustain it until 2028? A lot of them time the answer is probably going to be no.”

However, for those who could afford to take a small loss, he said now was the time to get a foot in the door in the historic buildings.

“If you’re a tenant or a buyer that can get in there now and absorb that upfront pain, then it’s a great time to do it, because you’re going to get a better deal, maybe lower rent,” he said.

“Then by the time it’s all done, you’re laughing. Short-term pain, long-term gain.”

• Correction: An earlier version of this report said light rail construction would finish in 2028. Major construction is scheduled to finish in early 2027 with operations beginning in 2028.
  

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