Japanese retailer Daiso to convert Elizabeth Street office space into shop after recent Brisbane opening

Japanese retailing giant Daiso, having recently opened a new store in the Myer Centre in Brisbane, has leased 1,800 square metres of office space at Level 1, 2 Elizabeth Street, across from Flinders Street station for a new store.

The gift and homewares retailer, promising "everyday life solutions for one price of $2.80" and which has 3,200 shops in 25 countries, will convert office space to first floor retail with escalators from Flinders Street providing access to the store.

The rent has not been disclosed but Daiso will pay more than $200 per square metre over office rents.

The building, recently vacated by long-standing tenant the Commonwealth Bank is known as "Riverview House" and is owned by Fivex Commercial Property, which plans to redevelop it.

According to Fivex spokesperson Joshua Berger, Melbourne City Council plans to convert the Elizabeth Street block from Flinders Lane to Flinders Street to a pedestrian mall.

The planned conversion from office to retail comes as BIS Shrapnel forecasts the office vacancy rate in Melbourne to reach 10% by the end of the year, which could see other office landlords consider a similar strategy, if space remains vacant.

The lease was negotiated by Michael Di Carlo and Jeremy Marmur from Savills alongside Ben Tremellen, Colliers International retail leasing manager and , Tim Boyce, Daiso property executive, who said the owner has added significantly to the income and capital value of the property by undertaking the conversion.

"Traditionally, retailers have had a strong preference for ground floor shop fronts, but as vacancy across the Melbourne CBD remains tight I believe we will see an increase in what we call vertical retailing, particularly with big box international retailers,” said Tremellen. 

“At Colliers International, we are working with numerous landlords to activate multiple levels for retail use. This new Daiso store will be one of the largest Level 1 retail offerings in the Melbourne CBD when it opens later this year.

Daiso launched in Australia in 2010 with a store in Abbotsford and also has stores at Westfield Doncaster, Highpoint Shopping Centre and on Bourke Street in the Melbourne CBD.

Daiso’s Australian CEO, Kit Cheong – a former senior executive at the Coles Group and Pacific Brands – says there are plans for up to another dozen stores to open this calendar year along the east coast.

It sells everything from potholders to pencils, lollies and locks.

It has 2,500 stores in Japan with 500 in 25 countries.