CBD continues post-pandemic bounce back

CBD businesses continue to bounce back from pandemic era difficulties as retail vacancies decrease to 6.1 per cent according to the latest Walk the CBD report released by Fitzroys.

The real estate market report found a two per cent decrease in retail vacancies last year and an eight per cent decrease from the year before that.

Despite significant recovery, vacancy rates are still well above pre pandemic levels. From 2013 to 2018 retail vacancies in the CBD averaged three per cent according to a 2018 report by global real estate company Knight Frank.

“At various points during and in the fall-out of the pandemic there was consternation as to what the role of the CBD might be going forward,” Fitzroy’s division director James Lockwood said.

“Melbourne’s CBD is showing that it has a vital role to play as the cultural and financial heartbeat of Australia’s largest and fastest-growing city.”

The report counts all street-facing shops in the CBD, including those within arcades and shopping centres.

Hospitality, food and beverage and entertainment businesses contributed most to the take up of empty space. The proportion of these spaces increased from 34.1 per cent at the beginning of 2023 to 47.4 per cent this year.

“The recession of the 1990s was followed by innovation across the CBD, and we’re now seeing a similar pattern of new hospitality venues opening, laneways being activated and inner-city living taking off again,” Mr Lockwood said.

The increase in hospitality businesses reflects a broader shift toward twilight trading in the city.

Last year’s Mainstreaming the Twilight Trade report by the Australian Retailers Association found that foot traffic in the CBD was 30 per cent higher between 5pm and 7pm than between 8am and 10am on weekdays.

Foot traffic after 6pm is up 35 per cent so far this year as visitors increasingly come into the CBD for dining and entertainment.

In a statement last year the City of Melbourne’s city activation portfolio lead Cr Roshena Campbell said, “Entertainment spending much of it after-hours is up 60 per cent since 2019. We’re supporting our retailers to trade into the evening so they can also tap into this market.”

Businesses are continuing to invest in improvements to commercial spaces in the city. City of Melbourne data shows permit approvals for alterations to shops and restaurants were up 89 per cent.

The imminent opening of the new Metro Tunnel stations is driving investment in the Swanston St area, which has gone from having among the highest vacancy rates in the city to the lowest as retailers move in in anticipation of increased foot traffic around the new stations.