_Collingwood comes of age

Given its close proximity to Melbourne’s CBD, it’s somewhat surprising that Collingwood has historically been a bit of a sleeper suburb, but that is set to change. 

In many respects Melbourne’s former industrial heartland, some of the city’s most striking warehouses can be found in Collingwood, with the best of the lot lining Oxford Street. Compared to nearby Richmond though, Collingwood took longer to shake off its blue collar origins.

Nevertheless, its grand warehouses – a product of a time when it was the hub of the textile and manufacturing industries – were converted into trendy loft apartments in the 1990s and 2000s, and more recently into commercial offices, sparked by the gentrification of Smith Street.

Reflecting its future growth potential, Grocon are developing a substantial scheme on Northumberland Street, with leading skincare company, Aesop, signed on as an anchor tenant, along with prominent coworking outfit The Commons.  And American developer Hines is set to develop a $200 million office tower on Wellington street, made out of prefabricated timber. 

Still, the area has retained much of its bohemian identity, and this has paved the way for its main street – Smith Street – to become arguably Melbourne’s foremost hipster locale. It is through this urban edge, coupled with the area now falling under the auspices of the government’s ‘Commercial Zone 3’ category, that Collingwood’s reputation as an inner fringe office destination is assured for years to come. 

And reflecting this, like other inner east fringe suburbs, office yields in Collingwood have compressed by a whopping 150 basis points in the last four years, with yields now ranging between 5.0% to 5.5%. With gentrification set to continue, and Melbourne’s population set to surpass Sydney’s within the next 5-10 years, we expect the commercial growth within Collingwood to continue in the years ahead.