Collingwood Commercial Corridor Attracts Major Investment as Early Movers Profit

The numbers are hard to argue with. Commercial floor space along Collingwood's Smith Street precinct has seen asking rents climb sharply over the past 18 months, with ground-floor retail and mixed-use units now regularly listed above $420 per square metre annually, a figure that would have seemed optimistic as recently as late 2024. Developers, institutional funds, and a growing cohort of owner-occupiers have taken notice, and several landmark sites are already under active transformation.

The timing is not accidental. Collingwood's City Development Authority pushed through a sweeping zoning amendment in March 2026 that unlocked higher-density residential use across 14 blocks north of Johnston Street, removing a planning constraint that had bottlenecked development applications for the better part of a decade. Combined with the confirmed extension of the Collingwood Light Rail Connector, due to open its eastern spur by Q3 2027, the precinct now offers what institutional investors call a rare dual catalyst: better zoning and better bones.

Who Is Already Moving

The most visible early beneficiary is Northgate Property Group, which broke ground in February on a $68 million mixed-use tower at the corner of Smith and Peel streets. The 12-storey project, branded The Peel Quarter, reserves its lower four floors for commercial tenants and has reportedly pre-leased two of those floors to a regional co-working operator and a specialty healthcare provider. Construction hoardings went up before the zoning ink was dry, a sign the group had positioned itself ahead of the regulatory shift.

Further south, the former Collingwood Gasworks site on Wellington Street, long a subject of remediation disputes, has been formally acquired by the Meridian Urban Fund, a vehicle backed by a consortium of superannuation-linked capital. Meridian filed a development application in May 2026 for a 3.2-hectare mixed precinct combining build-to-rent residential, creative industry studios, and a publicly accessible laneway retail spine. The application is currently under review by the City Development Authority, with a decision expected before September.

Smaller operators are finding opportunity too. Several independent landlords along the Fitzroy Street retail strip, which runs parallel to the Smith Street corridor, have begun subdividing older warehouse tenancies into sub-400-square-metre units specifically to capture demand from food-and-beverage operators and design studios priced out of neighbouring precincts. At least three such conversions completed leasing within six weeks of listing in the first half of 2026, according to listings data from the Collingwood Commercial Property Exchange.

The Data Behind the Demand

The Collingwood Commercial Property Exchange's mid-year report, published June 30, recorded a precinct-wide vacancy rate of 4.1 percent for ground-floor commercial stock, the lowest reading since the organisation began tracking the figure in 2018. Industrial and warehouse vacancy sits slightly higher at 6.8 percent, though that figure has compressed by nearly three percentage points since January. The report attributes the tightening to a combination of genuine occupier demand and speculative withdrawal of stock by landlords anticipating further rent growth.

Residential is moving in lockstep. Two-bedroom apartments in new builds along the Alexandra Parade frontage are launching off-the-plan at an average of $785,000, up from roughly $695,000 for comparable stock in early 2025. That price trajectory is attracting buyers who see both a lifestyle play and a hedge against continued supply shortage in the inner precinct.

For businesses and investors still weighing their options, the calculus is becoming more urgent. The zoning reform that created this window does not grandfather legacy approvals indefinitely, and the City Development Authority has signalled it will reassess height limits in the Johnston Street buffer zone following the Meridian decision, a review that could tighten rather than loosen what is currently permissible. Buyers who waited through the remediation uncertainty of the Gasworks site and the years of zoning stagnation are now being rewarded. Those who wait for absolute certainty may find the entry price has moved decisively against them by the time the light rail eastern spur opens its doors.

This article is general information only and is not personal financial or investment advice. Consider your own circumstances and seek licensed professional advice before making financial decisions.