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Australian consumers clearly aren’t ready to go online-only when it comes to shopping, with demand for retail space continuing to rise.
The COVID-19 pandemic caused consumers to quickly adapt to online shopping, with many wondering if the days of in-person shopping were largely dead. But with lockdowns now a distant memory, Australians have clearly voted with their feet, showing a willingness to return to retail centres for a variety of reasons.
Office culture has returned, albeit at higher levels of hybrid participation, and with more CBD foot traffic it appears that consumers appreciate the ease of being able to pop to the shops either at lunch or after work. Additionally, premium retailers’ focus on creating luxury in-store experiences has paid off, with shoppers keen to take advantage of in-person assistance, particularly when making big purchases.
Across Australia, retailers have taken note, with many increasing their footprints particularly in major capitals.
According to CBRE, retail vacancy rates across the major cities remain tight, with Melbourne’s CBD continuing to hold the lowest vacancy rate in the country. The vacancy rate in the Victorian capital has fallen to 6.9 per cent, a reduction of 50 basis points compared to the second half of 2023.
But it was Sydney’s CBD that recorded the largest reduction over the six-month period, dropping 66 basis points, with a 7.4 per cent rate of vacancy.
Perth and Adelaide markets also tightened with a vacancy of 25 per cent and 8.8 per cent, respectively. Brisbane was the only city to record an increase in vacancy of 50 basis points, to 19.2 per cent, though it’s lower than the 19.5 per cent vacancy rate the Sunshine State capital recorded in the first half of 2023.
Overall, Australia’s total retail CBD vacancy decreased 39 basis points to 12.1 per cent in the first six months of 2024.
CBRE’s head of retail research, Kate Bailey, credited the tightening figures to “the return to office, coupled with increased tourism and international student inflows”, which has led to increased foot traffic in CBDs and supported occupier appetite for floorspace within these cities.
CBRE’s head of retail property management and leasing, Sheree Griff, added that “retail continues to perform well, despite the cost of living pressures”.
Griff reported that retailers have changed their approach to attracting in-store foot traffic in light of recent economic pressures.
“More brands are focused on quality, immersive experiences in their bricks and mortar spaces which is meeting the needs of consumers who are being more purposeful with their spending.”
“We expect to see leasing growth to remain steady across 2024 as retailers continue to seek ways to showcase innovation and add value to their bricks and mortar offering,” Griff said.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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