CBD retail vacancy rates tighten across Australia’s major cities

Retail vacancy rates across Australia’s major capital cities remains tight with all CBDs recording a decrease in vacancy over the past six months, new CBRE data shows.

CBRE’s Australian CBD Retail Vacancy H2 2024 report found Melbourne continued to have the lowest vacancy in the country, across the five surveyed capital cities, at 6.0% with a reduction of 85bp compared to H1 2024.

Perth still has the highest vacancy rate in the country at 22%, despite recording the largest reduction of 285bp. The Sydney CBD tightened by 29bp, with vacancy now sitting at 7.1%. Brisbane’s vacancy decreased by 68bp to 18.5% and Adelaide's vacancy improved by 105bp in H2 2024 to sit at 7.7%.

The report shows Australia’s total retail CBD vacancy decreased 80bp to 11.3% in H2 2024.

CBRE’s Head of Retail Research Kate Bailey noted, “Overall, vacancy has tightened to the lowest level nationally since CBRE began this research series in H1 2021. The increase in workers returning to the office coupled with increased tourism and international student inflows, has led to more foot traffic in CBDs which has fuelled occupier appetite for floor space.”

A total of 5,665 CBD retail outlets were surveyed for the report. Due to its large CBD retail core, Melbourne had the highest number of surveyed outlets of any city at 1,676, followed by Sydney (1,602), Brisbane (1,352), Perth (659) and Adelaide (376).

CBRE’s Head of Retail Property Management & Leasing Sheree Griff said, “Australia has a vibrant and dynamic retail landscape. We expect to see leasing growth remain steady across the year as brands continue to choose bricks and mortar spaces to showcase innovation and provide quality experiences for discerning consumers.”

Sydney

Sydney CBD retail vacancy tightened in the second half of 2024 by 29bp, with total vacancy now sitting at 7.1%. This was the third consecutive half-yearly contraction for Sydney since H1 2023.

CBRE’s Director – Retail Occupier, Sam Embling said, “Demand for core strip locations in the CBD remain strong as occupiers seek to promote brand awareness and push product sales. The strong performance of luxury brands and the arrival of new F&B entrants continue to strengthen Sydney’s CBD centers, driven by rising foot traffic and returning office workers,” Mr Embling said.

“The arrival of the Metro has significantly boosted foot traffic in the Sydney CBD, particularly around key retail hubs like Martin Place, transforming the area into a high-traffic destination. This has driven demand from high-profile retailers, including luxury brands and specialty stores looking to capitalise on the increased activity.”

Arcade retail vacancy recorded the largest decline in H2, dropping 76bp to 6.9%. Notably, the Strand Arcade’s vacancy fell to 0.0% from 7.2%, highlighting the strong demand from premium and specialty retailers wanting to secure a prominent high foot traffic location.

Strip retail vacancy also tightened, contracting 57bp to 7.6%. Sydney’s core CBD continued to attract a strong inflow of global brands securing flagship tenancies in the past six months including Saint Laurent and Christian Louboutin at Westfield Sydney.

Looking ahead, retail vacancy in Sydney’s core CBD is expected to decline further as record-high population growth and the expansion of the Sydney Metro continues to drive foot traffic and demand across all retail categories.

Melbourne

Melbourne’s CBD retail vacancy continues to trend downward, tightening 85bp in H2 2024 to 6.0%. This is the third consecutive decrease in retail vacancy for the Melbourne CBD.

Vacancy across arcades and centres saw notable declines in H2 2024, dropping to 10.1% (-250bp) and 2.8% (-127bp) respectively. While strip retail locations recorded a slight increase, up 30bp to 7.2% in the past six months.

Food & beverage and fashion retailers continue to dominate Melbourne’s CBD, collectively accounting for approximately 52% of the surveyed areas in H2 2024.

CBRE Director of Retail Leasing Jason Orenbuch said, “We’re continuing to see landlords actively invest in their existing assets. This focus on upgrading and revitalisation is expected to deliver positive outcomes as significant retail development projects near completion later this year. As a result, we expect to see tenants in the CBD become more proactive in their leasing decisions and push vacancy down even further.”

Brisbane

Brisbane’s CBD retail vacancy decreased by 68bp to 18.5% in H2 2024. This tightening in vacancy can be attributed to an overall increase in CBD visitation as well as an increase in tenant demand for flagship stores in prime locations in the CBD.

Strip vacancy decreased by 217bp to 14% as high demand for flagship stores in prime locations continued to hold. Arcade vacancy tightened by 357bp to 28.3%.

CBRE Senior Director of Retail Leasing Andrew Woodgate noted, “The Brisbane CBD’s retail sector continues to benefit from a gradual return to office assisted by the cut to public transport fares and the completion of major projects, like the Kangaroo Point Bridge and Queens Wharf, which are driving increased visitation. We expect to see this momentum continue in the medium to long term with major redevelopments including the completion of the new Albert Street train station, Waterfront Brisbane and Howard Smith Wharves, set to revitalise key areas of the CBD.”

Perth

Perth’s CBD retail vacancy continues to improve, tightening by 285bp during H2 2024 to 22.2%.

Strip vacancy decreased by 130bp to 22.6% driven by tightening across the Murray Street Mall and the Hay Street Mall, as well as on Hay Street (west of the mall), however, there is a clear divergence between core and non core strip vacancy with the overall core strip vacancy sitting at 13.5%. Vacancy in centres decreased by 330bp to 22%, which can be attributed to an improvement in vacancy across Brookfield Place, One40William, and Forrest Chase.

Perth’s retail arcades saw the biggest improvement in H2 2024, notably in Piccadilly Arcade, with vacancy decreasing by 680bp to 20.9%. CBD retail centres decreased by 330bp to 22%.

The transformation from west of the Murray Street Mall along Murray Street into a high-end luxury shopping precinct continues with Gucci relocating from King Street and Omega, Cartier and Longines opening new stores in the past six months to December 2024.

CBRE Senior Director & WA Head of Retail Fred Clohessy said, “Perth’s CBD retail sector continues to strengthen with luxury retailers opening new stores in 2024 and Dior to open this year amid continued consumer demand for high-end products.  Overall retail sales activity is performing better than the other major eastern states markets due to WA’s strong population growth rates, low unemployment levels, highest office occupancy rates in Australia, and solid domestic economic performance.

“The development of ECU’s Perth CBD campus is a watershed project for the Perth CBD and the retail market from 2026 and beyond. Construction of ECU’s 65,000 sqm Perth CBD campus development has officially reached its full structural height of 11 levels and is expected to reach completion in late 2025 with students expected in semester one 2026. ECU’s Perth CBD campus is expected to significantly boost activity and population growth including student accommodation in the Perth CBD and increase retail spending with the campus expected to cater over 8,100 students and over 1,100 staff from 2026,” Mr Clohessy added.

Adelaide

Overall vacancy in the Adelaide CBD improved by 105bp in H2 2024 to sit at 7.7%, the third lowest vacancy rate in the country behind Sydney and Melbourne.

The decline in retail vacancy was largely driven by tightening across the core retail strip of Rundle Mall where vacancy improved by 400bp to 4.3% with new/committed store openings for apparel operators including Sportsgirl and Supre as well as luxury watch retailer The Hour Glass.

In the CBD centres, which include Rundle Place and Myer Centre, vacancy was relatively stable at 11.3% in H2 2024, an increase of just 20bp. The Adelaide Arcade continues to be well occupied with a vacancy rate of just 3.8%, up 180bp.

CBRE Director of Retail, Julia Pottenger said, “Retail vacancy in the Adelaide CBD continues to be on a positive downtrend driven by steady economic, jobs and population growth. Adelaide CBD has strong visitation trends, including strong office occupancy, which also supports the retail market.”