What’s next for Adelaide CBD Retail/Crystal ball prediction for 2022
Wrapping up a unique 2021, we see the opening of our borders to states including Victoria and New South Wales. Interstate travel and tourism is set to increase bringing with if footfall to the CBD and subsequent retail spend.
Moving into 2022, the Adelaide CBD will also benefit from the international borders opening and overseas students returning to Adelaide. Many of the partially vacant student accommodation towers in the CBD will regain occupancy, therefor supplying the surrounding retail and hospitality businesses.
Key to the recovery of CBD retail is the re-utilization of city office space, bringing with it Monday to Friday office workers. The levels of occupancy in this market are due to increase into 2022. Despite this increasing shift from the working-from-home environment, CBD retail vacancy rates are anticipated to remain above average. It is likely, however, that much of this vacancy will be confined to the enclosed centres of Rundle Mall which experience lower foot-falls.
Ultimately core retail precincts such as Rundle Mall and Rundle Street will likely recover throughout 2022 with rising occupancy throughout.
The typical cycle for retail spending and retailer occupancy levels is aligned with CBD employment levels. CBD employment levels will be aided by recent leasing pre-commitments to office space from large occupiers such as the state and federal government, and new to Adelaide private and public companies comprised of space, technology and defense industries.
What are the biggest challenges facing the sector/ Where is the future of retail going (Retail CBD)
Overall, discretionary spend is beginning to stabilize as consumers begin to return to normality. The prior 18 month overspend on many household items and services (such as large electronics, home upgrades/renovations and automobiles) has meant that consumers have generally exhausted what they can acquire locally and we beginning to see a plateau in revenue from these sectors.
With the reintroduction of overseas travel and international spending, we’ll begin to see a stabilize and return to normality of retail spend to pre-pandemic levels.
Beyond this immediate period, bricks and mortar retailers will be continuing to rationalize space. Businesses need to ensure they are operating from efficient retail stores and maintaining a high-quality customer experience. Choice of geographic location of leased accommodation will continue to shift and refine itself from retail shop front to back of house warehouse and online distribution.
Supermarkets will continue to focus on logistics and technologies to improve online and delivery service/experience. The emergence of dark stores within the inner metropolitan regions will assist these aspects of online ordering and delivery. This will also have a downward trend on typical bricks and mortar Supermarkets and the turnover/footfall they receive.
Flagship national and local brands will always tend to maintain at least minimum levels of bricks and mortar, therefor the CBD demand for these stores will generally remain strong.
Landlords with secondary locations will need to adapt for alternate uses as retail shopping habits change. Spaces that have been converted through integration of non-retail uses are becoming more apparent. Office and education related tenants form a percentage of these changing uses along with modern hospitality spaces.
In the CBD, while bricks and mortar stores will not be replaced by online retail in the foreseeable future, consumers demand for an available online platform will remain.
The shift to hybrid working (mixture of home and office working) means companies need less office space. How much impact this will have on CBD retail remains to be seen.