Adelaide vacancy rates rose 2.6 percentage points to 18% and Melbourne rose 1.7 percentage points to 14.9%. The CBD vacancy rate rose the most in Brisbane, up 4.6% to 18.9%, where the Omicron wave combined with severe flooding in late February to delay the retail recovery in the central city
“Secondary CBD locations are struggling and contributing to the increased vacancy rate largely due to the flight to quality currently underway,” said Tanaka Jabangwe, associate director at CBRE for retail lease.
Along with the long shadow cast by the lockdowns and initial waves of COVID-19, the expected rebound in retail trade has once again been disrupted by labor shortages and supply chain issues. As staff are cut and equipment materials become scarce, new store openings have been pushed back to later this year or next.
The CBRE store count includes 4834 CBD retail establishments, spread across malls, galleries and strips. Melbourne has the highest number of stores at 1832, followed by Sydney at 1082.
Sydney’s CBD retail sector has proved more resilient thanks to a combination of factors: the return of international travelers in February, fewer lockdowns, more managed retail establishments within the centers and the expansion of high-end retailers.
Luxury brands Valentino, Dolce & Gabbana, Missoni and Brunello Cucinelli took advantage of softer terms to take long-term leases for flagship stores in Sydney’s CBD during the first half.
The fortunes of CBD retailers are closely tied to the daily foot traffic of shoppers and office workers. The sector was hit again in July as concurrent waves of COVID-19 and flu infections caused office occupancy rates to drop in most CBDs.
“The losers are not office tenants or office building owners, it’s all those retailers, cafes and restaurants that rely on office workers as customers,” said Ken Morrison, chief executive of Property Council of Australia, last week.