In Footscray, a suburb that has absorbed over a billion dollars in public infrastructure, the streets tell a quieter story: darkened shopfronts, decaying lots, and a bakery owner turned away from a space that had sat empty for two years. Across Melbourne's inner west, a generation of property owners has quietly shifted from landlords who sought income to speculators who prefer stillness — holding land as an asset rather than a place where life might happen. The gap between what it costs to build and what the market will pay has grown wide enough to swallow ambition, and the Property Council no
Footscray's Empty Storefronts: How Land Banking Stalls Melbourne's West
Better to let it sit vacant than risk losing money
Mark
So Phil Gaby's bakery has moved five times in five years. That's a lot of disruption. Why does he stay in Footscray if it's so unstable?
Mimi
He says the community is what keeps him there. His customers follow him. They believe in what he's doing. That loyalty is real, even if the business conditions are precarious.
Luke
But that's anecdotal. One successful bakery owner doesn't tell us whether Footscray is actually improving or just whether Phil has found a niche audience.
Mark
Fair point. So the real issue is land banking—owners leaving storefronts empty. Why would anyone do that?
Mimi
Because the economics have shifted. If you own a building and rents are low, and a tenant's business fails, you lose money. So you hold the site empty and wait for property values to rise or conditions to improve.
Luke
But how long do they wait? And what's the actual cost of holding? The report doesn't say whether these owners are losing money by leaving sites vacant, or whether they're actually ahead financially.
Mark
The report mentions that new apartments in Footscray cost $100,000 less than Melbourne's median. That seems like a problem for developers.
Mimi
It is. Construction costs are high, but the finished product doesn't command enough price to justify the build. So developers hold land too, waiting for prices to rise or costs to fall.
Luke
Again, we don't know if costs will fall. The report says there's "little indication" they will. So developers could be waiting indefinitely.
Mark
What about the government's $1.5 billion hospital investment? Shouldn't that have lifted the whole area?
Mimi
You'd think so. But infrastructure alone doesn't fix the underlying economics. If apartments still can't sell for enough to cover construction, the investment doesn't unlock development.
Luke
And we don't know whether the hospital investment has actually been completed or is still in progress. The timing matters for whether it's had any effect yet.
Le Pouls
- A Footscray baker who has survived five relocations was turned away from a two-year-vacant storefront by a landlord who preferred emptiness over the risk of a failing tenant.
- Despite $1.5 billion in hospital investment and millions more in transport and education, Footscray's central precinct is visibly stalling — derelict sites like the 17-year-abandoned Forges block stand as monuments to unrealised potential.
- A surge of approved dwellings — up 1,297 percent in a single year — has flooded the market and pushed apartment prices roughly $100,000 below Melbourne's median, making new construction economically irrational.
- Developers and landlords are now in a waiting game: holding sites until prices rise, costs fall, or existing stock clears — a standoff with no clear end in sight.
- The Property Council is urging the state to act decisively — cutting developer taxes, demolishing derelict buildings, and brokering public-private partnerships — warning that without intervention, the crisis could metastasise across the city.
In Footscray, a suburb that has absorbed over a billion dollars in public infrastructure, the streets tell a quieter story: darkened shopfronts, decaying lots, and a bakery owner turned away from a space that had sat empty for two years. Across Melbourne's inner west, a generation of property owners has quietly shifted from landlords who sought income to speculators who prefer stillness — holding land as an asset rather than a place where life might happen. The gap between what it costs to build and what the market will pay has grown wide enough to swallow ambition, and the Property Council now warns that without deliberate intervention, this paralysis may spread far beyond one suburb.
Phil Gaby has moved his bakery five times in five years. Through evictions and financial setbacks, he has kept Nan's Bakehouse alive in Footscray, sustained by loyal customers. But when he tried to lease a vacant Barkly Street storefront — empty for two years — the owner refused. The landlord, Gaby recalls, simply didn't want the risk of a tenant's failure. It was a calculation that would have been foreign to an earlier generation of property owners. Now it had become the norm.
Footscray has received $1.5 billion in hospital investment, alongside significant spending on transport, education, and sport. Yet the suburb has stalled. A new Property Council of Australia report identifies land banking as the central problem — owners holding sites vacant, waiting for conditions to improve rather than developing them. The economics are unforgiving: construction costs remain high, taxes are elevated, finance is expensive, and new Footscray apartments sell for roughly $100,000 less than Melbourne's median. For developers, building costs more than the finished product can fetch.
A flood of planning approvals — up 1,297 percent in 2022-23 — has kept prices depressed by outpacing demand, eroding the incentive to build. Across the suburb, the consequences are visible: the former Forges site has decayed for 17 years; Little Saigon Market, Kinnear's Ropeworks, the former bus depot, and the former Belgravia Hotel all sit unrealised. Collectively, they represent a landscape of lost housing, employment, and public life.
The state government points to planning certainty and infrastructure investment. Maribyrnong's mayor says the council is working collaboratively with landowners and government to move stalled sites forward. But the Property Council concludes that goodwill alone won't be enough. Its six-step plan calls for improved streetscapes, demolition of derelict buildings, tax relief for developers, public-private partnerships, dedicated council resources, and coordinated local services. Without such intervention, Footscray risks becoming a cautionary tale — a suburb where public investment built the stage, but the economics never allowed the performance to begin.
Phil Gaby has moved his bakery business five times in as many years. Nan's Bakehouse started at the markets, shifted to Footscray Plaza, expanded into an adjacent space, spawned a coffee van, then opened a location in Moonee Ponds before financial trouble forced it to close. Through evictions and setbacks, Gaby has kept the Footscray store alive, sustained by customers who followed him from one address to the next. He says he wouldn't want to be anywhere else. But when he tried to lease a storefront on Barkly Street, the owner turned him down. The space had been empty for two years. The landlord, Gaby recalls, simply didn't want to spend money maintaining it. Better to let it sit vacant than risk losing money if a tenant's business failed. It was a calculation that would have been unthinkable to an earlier generation of property owners, who saw rental income as an investment. Now the calculus had flipped.
Footscray is Melbourne's west, an inner-city suburb that has absorbed $1.5 billion in new hospital investment, plus millions more in transport, education, and sporting infrastructure. Yet despite this public spending, the suburb has stalled. A new Property Council of Australia report identifies land banking as the culprit—property owners holding sites empty, waiting for conditions to improve rather than developing them. The phenomenon is symptomatic of a deeper economic squeeze: construction costs remain stubbornly high, taxes and charges are elevated, finance is expensive, and apartment values are subdued. New apartments in Footscray sell for roughly $100,000 less than Melbourne's median apartment price. For developers, the math no longer works. Building a new project costs more than the finished product can command on the market.
The numbers tell the story. In the 2022-23 financial year, Footscray's central precinct saw 908 approved dwellings, a 1,297 percent jump from the previous year's 65. The following year brought another surge: 704 approvals, up from 38. This flood of approvals has kept prices depressed. As supply has grown faster than demand, the incentive to build has evaporated. Developers are now holding sites, waiting for feasibility to improve—waiting for existing apartments to sell, for prices to rise, for construction costs to fall. But there is little sign that building costs will drop materially anytime soon. The Property Council warns that if this pattern spreads across Melbourne, it could undermine the feasibility of new projects citywide.
The vacant sites are visible everywhere. The former Forges site, once a thriving retail destination, has decayed for 17 years. Little Saigon Market, Paint Spot, Kinnear's Ropeworks, the former bus depot, the former Belgravia Hotel—each represents a different owner's calculation, a different set of commercial circumstances, but collectively they form a landscape of unrealised potential. Deteriorating buildings line the streets. Shopfronts sit dark. The Property Council's report names these sites explicitly, noting that they represent a significant volume of lost housing, employment, activation, and public realm opportunity.
The state government has invested heavily in Footscray's infrastructure. A spokesperson pointed to planning certainty, transport connections, and investment in health, education, sport, and community services. Maribyrnong City Council's mayor, Mohamed Semra, said the council was working collaboratively with landowners, businesses, and government to speed action on vacant sites. Yet the Property Council concludes that business-as-usual won't be enough. The report urges the state to adopt a six-step plan: improve streetscapes, demolish derelict buildings, waive or reduce taxes and levies for developers building in Footscray, pursue public-private partnerships for large sites, dedicate council resources to moving big projects forward, and coordinate local support services to restore confidence in the suburb's safety and viability. Without such intervention, the report suggests, Footscray's revival will remain stalled—a cautionary tale about what happens when the economics of development no longer align with the infrastructure a city builds.
Citations marquantes
After we failed at Moonee Ponds, I realised that success meant the community and the people. Even our store now has been held together by people from our old store, continually following us around because they believe in the same things we do.— Phil Gaby, owner of Nan's Bakehouse
Developers are likely to be holding sites and waiting for feasibility to improve. That could come through stronger sale prices, as the existing apartment supply is absorbed, although there is little indication that construction costs will fall materially in the foreseeable future.— Terry Rawnsley, KPMG urban economist
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Economy & Finance