
Melbourne is leading the country with the lowest retail CBD vacancy rate across the country, according to CBRE.
The most recent report on Australian CBD Retail Vacancy for the second half of 2023 underscores Melbourne’s status as the city with the lowest vacancy rate nationwide, standing at 7.37 per cent, and achieving the most significant reduction in vacancies at -330 basis points.
Vacancy across all three retail categories decreased over H2 2023, with the largest recorded declines noted in laneways & arcades and strip retail, at 3.6 and 3.5 per cent respectively. Both categories ended H1 2023 with vacancy levels above 10 per cent, driven by a few non-core locations.
Sydney’s CBD also experienced a decrease, down by 275 basis points to an 8.1 per cent vacancy rate. The Sydney reduction represented the first half-yearly contraction since H1 2022 and the largest movement on record since H1 2021, thanks to the openings of Lego and RM Williams.
Brisbane and Perth each had a marginal tightening to have vacancies of 18.7 and 25.3 per cent, respectively.
Brisbane’s tightening vacancy rate can be attributed to a tenant flight-to-quality with high demand for flagship stores in prime positions and an overall increase in CBD visitation.
Retail vacancy in Perth’s CBD has continued to trend down since its recent COVID pandemic peak of 26.5 per cent in H1 2022. The vacancy improvement was driven solely by lower vacancy in retail strips which more than compensated for higher vacancy in Perth’s retail arcades and centres.
CBRE’s Head of Retail Research Amita Mehra said overall, vacancy has tightened nationally.
“The return to office, coupled with increased tourism and international student inflows, has led to more foot traffic in CBDs, supporting occupier appetite for floorspace within these markets.”
CBRE’s Head of Retail Property Management & Leasing Sheree Griff said Australian’s 2024 retail landscape was positive, despite cost-of-living pressures.
“Bricks and mortar spaces remain highly desirable to retailers in ensuring their brands are vibrant and have a purposeful vibe that fosters a culture of innovation, as evidenced by the current flight to quality trend.
“Retail sales growth is attributed to consumers seeking to look good and feel good, with the strongest sales being reported in the wellness sector, cafes and restaurants.
“Our view for 2024 is that leasing growth will occur across all markets as retailers partner with landlords to evolve and meet the live, work, and play needs of consumers.”