They stare at you in the middle-ring suburbs of our major cities.

Key points: Local councils are encouraging more shops, but many are away from established shopping strips

Local councils are encouraging more shops, but many are away from established shopping strips Retail vacancy rates in some municipalities are nearing 40pc

Retail vacancy rates in some municipalities are nearing 40pc The structure of bank loans means an empty shop is often more valuable to property owners than having a tenant on a lower rent

Recently completed low-rise apartment blocks humming with light, movement and food delivery couriers buzzing the intercom … above empty retail spaces that have never been rented.

It's a complex mystery with a bizarre list of culprits, including: Amazon boss Jeff Bezos; overly-positive local council planning assessors; the conventions of bank loans; and the very residents walking past the vacant shells as they head to work.

"A lot of these developments … they initiated too much retail," said David Bourke, director of commercial real estate firm Fitzroys, attempting to explain the complex factors.

"When they were initiated [local] councils were very keen to activate retail on the ground floor … but a lot of these developments were somewhat removed from the primary retail precincts, on the periphery.

"So although they might be 60 or 70 apartments upstairs — and [potentially] 200 people living in that development — often it's not a lot to drive retail to be able to sustain a retailer on the ground floor."

'Perfect storm'

The expansion in retail space has occurred at the same time as the long-term model of retail is under pressure.

Commercial retail agent David Bourke says the empty shops are a bad look for retail strips. ( ABC News: David Ross )

Mr Bourke, who has more than 30 years' experience in the field, calls it a "perfect storm".

An expansion in so-called 'hard-top' shopping centres and 'big box' retailers has taken anchor tenants — plus cash and other tenants — from smaller centres and shopping strips.

At the same time, online shopping now accounts for $10 in every $100 of retail spending.

The arrival of online behemoth Amazon and the rapid expansion of buy-now-pay-later schemes like Afterpay have also hit the already thin margins for retailers.

"We've seen almost a doubling up of the actual retail floor space across some regions," Mr Bourke said.

"That, coupled with the slowdown in retail, we've seen a lot of big shift and change in tenancy makeup."

Claire Perry runs the Sydney Road Brunswick Association, which represents traders in the long shopping strip just north of Melbourne's central business district.

Massive apartment developments on, and on the periphery of, the strip have added thousands of residents. But it has not stopped a slow rise in vacancy rates.

"Times are changing," she said.

"People are getting a lot more online, they're getting UberEats, they're becoming probably a bit more lazy.

"They're time poor, so they're not always coming to visit the shops."

Retailers are disappearing from Main St

Changes to the retail model are obvious.

In the 2.7-kilometre stretch she represents, there is no longer a single shoe shop.

More than 50 stores closed and 40 stores opened in the past year. But the mix has changed: more than half the new ventures were not retailers but services, such as lawyers, masseurs and gyms.

Local councils are encouraging more shop fronts, but not more shoppers. ( ABC News: David Ross )

Ms Perry blames councils for flooding the area with masses of commercial space, at exactly the wrong time. In many instances, a single shop has been demolished and replaced with an apartment foyer and four-to-six smaller shopfronts.

"I think the councils need to look at the areas these developments are going in to and ask, 'Do we need another four shops here?'"

"There's no point in a shop sitting there empty for two years, three years, even four years some of them. There's just no point — what's the value in that?"

More valuable left vacant

But value is part of the problem.

Karl Fitzgerald, project director at thinktank Prosper Australia, said empty shops are not going to fill up soon, because banks put developers in a "straightjacket" that prevents them lowering rents to attract a tenant.

Retail valuations are often based on the last rent received, so a shop sitting empty is more 'valuable' than one that cuts its rent to attract a tenant.

Any rent reduction — even if it lures a tenant — could trigger increased loan repayments, because it changes the loan-to-value ratio (known as LVR) of the property.

Prosper Australia director, Karl Fitzgerald, says alternative uses need to be found for empty shops. ( ABC News: David Ross )

"In order to keep the banks happy they cannot reduce those rents," he explained.

"So they keep them at a higher price and, from there, they wait for the market to catch up to them.

"They've got to keep the rates at that level — if they try and reduce them they'll be asked to make up that shortfall."

Middle-ring suburbs like Box Hill in Melbourne have been drenched in low-rise apartments in recent years.

Prosper Australia's research — which tallies water meters where not a single litre of water has been used in a year — suggests as much as 36 per cent of commercial space in that suburb is empty.

Empty shops beget more empty shops

The problem may grow.

Approvals of apartments in four-storey blocks or higher doubled to 4,700 across Australia in the year to January. That is despite overall approvals falling around 1 per cent to just over 200,000.

"What's needed is a realisation that these ground floor vacancies will continue," Mr Fitzgerald says.

Mr Bourke predicts population growth and non-retail uses, like gyms and services, will eventually gobble up the empty spaces.

He wants developers and councils to be more "proactive and open-minded" about alternate uses for ground floor sites.

Not a good look. Empty shops drag down retail strips. ( ABC News: David Ross )

Part of that is including features such as grease traps and three-phase power in potential retail spaces — to broaden their potential uses.

Some apartments have used the long-vacant spaces for galleries, childcare centres or to provide services such as gyms for residents.

"Aside from a streetscape perspective, it doesn't do the development all that well if you've got all these vacancies," Mr Bourke said.

Back on Sydney Road, Ms Perry said shopping strips are adapting to a surge in services and online food delivery — but need help to stem the flood of vacant shops.

"Once you start getting empty areas and empty shops it can often bring vandalism and graffiti," she explained.

"And it starts to sort of run the shopping strip down and give it a tardy look.

"It doesn't help the other traders. Especially if you've got an empty shop on either side of you — it doesn't draw customers here and people start to think, 'Oh, the shopping strip isn't worth coming to'."