City retailers welcome back shoppers

City retailers are benefitting from the return of office workers, increased tourism and an influx of international students which is boosting occupancy not only at food outlets but also in luxury stores.

While city office towers have more people attending mid-week, stores in the main pedestrian thoroughfares are showing signs of stronger demand throughout the week and on weekends.

city retailers welcome back shoppers

Interactive stores such as LEGO are proving popular with city shoppers.

There has been a plethora of new leases, with the more popular tenants being interactive stores like LEGO in Sydney’s Pitt Street Mall and Fortress in Melbourne Emporium.

CBRE’s Australian CBD Retail Vacancy report for the six months to the end of December reveals that of the four capital cities surveyed, Melbourne continues to record the lowest vacancy rate in the country, at 7.37 per cent.

In Sydney, the CBD recorded a decline of 275 basis points resulting in an 8.1 per cent vacancy. Brisbane and Perth each had a marginal tightening to have vacancies of 18.7 per cent and 25.3 per cent respectively.

CBRE’s Australian head of retail leasing, Leif Olson, said retail sales growth and returns to the office have underpinned a reduction in vacancies.

‘Retailers are focusing on their connection to consumers, which has resulted in bigger, curated-experience stores, a trend we’re seeing across the globe.’

Leif Olson, CBRE Australian head of retail leasing

“Sydney is viewed as a good place for international brands to do business, given Australia’s strong and safe economy and consumer spending power,” he said.

“Retailers are focusing on their connection to consumers, which has resulted in bigger, curated-experience stores, a trend we’re seeing across the globe.”

In Melbourne, vacancies across all three retail categories fell over the last six months of 2023. The largest recorded declines were seen in laneways and arcades, and strip retail, at 3.6 per cent and 3.5 per cent respectively.

CBRE director, retail leasing, Jason Orenbuch said Melbourne’s CBD was undergoing significant change, with major developments taking place throughout the city.

“One of the most notable is the new Metro Tunnel project, which will see new stations sprawled from north to south and including a number of new retail outlets throughout”, Orenbuch said.

“Multiple other arcades and significant parts of existing centres were undergoing major redevelopment in the last six months of 2023.” These developments are expected to entice shoppers back to the CBD in the coming year.

On the investment side, a surge in demand from small to medium funds, syndicates and private investors is offsetting a drop in traditionally dominant institutional capital.

Colliers managing director of retail capital markets Lachlan MacGillivray said that while market fluctuations saw institutional capital adopt a more cautious approach, other funds, syndicates and private investors came back to the market.

“Robust deal flow of $6.28 billion last year and heightened interest from fund/syndicate and private investors is due to strong asset performance and major undersupply of retail space, complemented by quality leases and strong tenant demand,” MacGillivray said.

“On-the-ground insights from major retail investors indicate a looming groundswell of activity which could lead to quality asset demand outstripping supply of assets in 2024.”

This includes more than $1 billion in assets currently under due diligence, as “counter-cyclical opportunities to acquire high-performing centres maintain relative value attraction,” he said.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.

News Related

OTHER NEWS

Disrupt Burrup protesters searched and phones seized

Disrupt Burrup Hub group say police have issued move-on notices prohibiting access to the WA site. A group of climate activists and filmmakers say their phones have been seized during ... Read more »

The generation driving a ‘megatrend’ of poor mental health in Australia

As individuals, we have unique experiences that affect our mental health and wellbeing, but what about the collective experiences that influence each generation? The mental health of Australians has been ... Read more »

Geraldton meatworks set to reopen after five years in bid to meet chilled meat demand from Asia, Middle East

Syed Ghazaly wants to see the Geraldton abattoir reopen early next year to process 1,000 sheep a day. (ABC Mid West Wheatbelt: Chris Lewis) The new owners of a mothballed ... Read more »

Blues seek ‘growth’ as pre-season begins; new Hawk aims to be AFL’s serial pest

Carlton coach Michael Voss says he and his players understand there are heightened expectations on them, but insists the Blues are ready to develop individually and in their game plan. ... Read more »

Bulldogs continue signing frenzy with swap deal

The Bulldogs’ off-season signing frenzy is set to continue with the club reportedly set to land Cronnor Tracey in a swap deal. The Sydney Morning Herald reports Tracey is expected ... Read more »

Customers to weigh in as Optus disruption comes under microscope

Consumers and impacted businesses are being urged to have their say on the Optus outage, with the federal government laying out the terms of reference for its review into the ... Read more »

Released detainee unable to be contacted by authorities

It has been revealed a released immigration detainee is unable to be contacted by authorities. Border Force has referred the matter to the Federal Police as authorities are attempting to ... Read more »
Top List in the World