A few weeks ago, a story did the rounds about an Alexandria warehouse being used as a pop-up retail space for luxury brands. The kind of thing that gets broad attention not because it’s outlandish, but because it makes complete sense the moment you hear it, but it’s not that unusual. We have a prime location, raw industrial bones, flexible layout and an owner and property manager willing to think beyond the standard lease.
It got me thinking. There are loads of properties on the city fringe where the traditional use is the only use anyone has ever considered. This is a shame because many of these assets could be doing considerably more work.
From Alexandria warehouses to Surry Hills shop tops, the city fringe is full of assets sitting on unrealised potential. When we are leasing a property, we explore options apart from the traditional uses of the space. Here are some of the alternative uses.
I want to be clear before I go any further: none of what follows is legal or planning advice, and some of it will depend heavily on zoning, council requirements, and the specifics of your property. This isn’t a how-to guide. It’s to give you a few ideas and encourage you to talk to us if your property seems slow to lease.
The Alexandria story is a good example of something broader. Industrial and warehouse spaces on the fringe (think Alexandria, Erskineville, St Peters or Marrickville) have long attracted creative tenants. Subletting a portion for pop-up retail, micro-fulfilment or short-term brand activations is a different conversation from a standard commercial lease.
Pop-up retail is usually in demand. Brands, particularly in fashion, beauty, and homewares, are actively looking for short-term spaces to test new markets, move excess stock or create experiences for product launches. A warehouse with good street presence, high ceilings and easy vehicle access is attractive and holds intrigue in ways a shopping centre tenancy simply isn’t.
Micro-fulfilment is another angle. As last-mile logistics have become more expensive and time-sensitive, operators need small, well-located distribution points closer to the consumer. An underused section of a warehouse, sublet to a logistics or e-commerce operator on a flexible arrangement, can generate income from space that would otherwise sit empty.
None of this requires a major capital commitment. It does require a willingness to entertain shorter, more flexible lease terms and that might not suit your long-term goals.
Big-box retail has had a difficult run. Some of those large floorplates in inner suburbs are hard to lease to a single tenant at rents that actually make sense. That doesn’t mean the space is without value; it might just mean the space needs to be reimagined.
Subdividing a large retail tenancy into smaller, flexible units opens up a different pool of occupants. Think per-seat arrangements like the model some hair salons have used for years, where individual stylists lease a chair from the business owner and the leaseholder. The same logic applies to beauty services, allied health, personal training studios, and a range of professional services.
Co-working is an obvious play and this type of accommodation remains in demand in the right locations. However, there’s also a case for mixing uses more deliberately: a café at the front, a co-working floor behind it and a handful of small offices or creative studios filling out the rest. The key is being realistic about what the location can support and what kind of fit-out investment makes sense given your appetite for risk.
Pop-up operators, who are looking for space for anything from escape rooms and concept stores to exhibition spaces and to accommodate a seasonal business like selling ski wear, are also worth considering. They tend to want short lease terms and modest fit-out support. The bonus is they bring foot traffic, which has its own value if you’re thinking about the broader amenity of the building.
Caveat: Any subdivision of a tenancy, particularly changes to use class, will typically require a development application or at minimum a change-of-use consent. Talk to us before you get too far down the track.
You might have realised from previous blogs that shop tops are an investment favourite of ours. A well-positioned shop top on the city fringe already has a structural advantage: commercial below, residential above, giving you two income streams from one asset. However, some owners treat the residential component as an afterthought, either letting it on a standard residential tenancy or leaving it vacant.
The residential space has more potential than it’s often given credit for. One idea worth exploring is an artist residency arrangement; that is, offering the space to a working artist or creative at a below-market rent in exchange for a defined residency period, perhaps with some form of public output or community engagement. It’s not a conventional income strategy, but it can be a compelling proposition for the right property in the right pocket of the city, and it generates a different kind of value: profile, connection to the local creative community, a story worth telling.
A more commercially minded variation (and this would require some careful thought about licensing, fit-out, and location) is a private dining arrangement. The residential space or a well-appointed room within it is hired out for private dinners, with a private chef engaged by the guests. It’s a model that exists in parts of Europe and has begun appearing in some Australian cities.
Of course, you or your tenant would need to comply with strict planning, health and building standards (including fire safety), and whether or not it stacks up financially will depend on a lot of variables. However, it’s an idea and it’s worth knowing it exists.
Older boarding houses in established inner suburbs represent an interesting problem. They’re often on good land, in good locations. Boarding houses do provide essential low-cost accommodation. However, the traditional boarding house model is increasingly difficult to operate commercially. Maintenance costs are high, management is intensive and the regulatory environment has tightened considerably over the years.
The bones of a boarding house, with its multiple rooms and shared amenities for multiple occupants, lend themselves to a couple of alternative uses. Boutique accommodation is one. A small, well-styled hotel or guesthouse in an inner-fringe suburb, trading on character and location rather than amenity, can perform well in the right market. The inner west and the fringe of the CBD have a number of successful examples.
Student accommodation is another. Sydney’s student population remains significant and the demand for affordable, well-located housing near universities and TAFE campuses consistently outstrips supply. A boarding house in Surry Hills, Glebe, Ultimo or Redfern is already in the right geography. Whether the numbers work will depend on the scale of the building and what consents are required.
A note on planning: Boarding house-to-hotel and boarding house-to-student accommodation conversions are both subject to planning controls, and these vary by council area. We would start with the SEPP on Housing 2021.
We don’t expect many people to read this and immediately ask us to convert their warehouse into a luxury pop-up or their shop top into a private dining room. These ideas require the right property, the right location, the right owner and in most cases a fair bit of professional advice before they become viable.
However, the city fringe is genuinely full of properties that are underperforming not because they’re in bad locations or in poor condition but because the only use anyone has ever considered is the most obvious one. Sometimes it’s worth asking whether there’s a conversation to have about what a property could be doing.
If your imagination has been sparked, get in touch. We’re happy to talk through some of the ideas we mentioned.
As always, when considering an investment in property, you should take into account your financial circumstances and seek advice from your financial adviser before acting.
As dedicated local commercial real estate agents, we can help you extract more value from your commercial property. Please get in touch to discuss your circumstances and assets so we can give you personalised advice. Whether it’s commercial leasing, management or sales, we’re here to help you with your Sydney-based commercial property.
Contact us at Ray White Commercial Sydney City Fringe
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