A recent Ray White survey has shed light on the current state of retail and office markets across Australia's major city centres. The study reveals a complex interplay between office occupancy, retail performance, and city vibrancy, influenced by factors such as public transport accessibility, nighttime activities, and parking availability.

Sydney's CBD emerges as the nation's retail powerhouse, boasting a mere 5.4 per cent vacancy rate in its prime retail core. The city has become a luxury retail hub, with international brands occupying a quarter of core shopfronts. Despite this retail success, Sydney's office market recovery has been sluggish post-pandemic, with vacancy rates at 11.6 per cent. However, this represents an improvement from the previous year's 12.2 per cent.

Sydney's retail resilience is bolstered by robust tourism, efficient public transport, and competitive parking rates, especially during off-peak hours. Daily parking rates, while reduced, remain high at $78, but evening and weekend rates are more attractive.

Melbourne's commercial landscape paints a picture of contrasts. The city's retail sector, particularly the upscale "Paris End" of Collins Street, maintains its allure with a 10 per cent vacancy rate. This resilience is remarkable given the subdued CBD workforce presence. Melbourne faces the most significant challenges in office occupancy nationwide, with businesses struggling to entice employees back after prolonged pandemic lockdowns.

Despite office sector woes, retail has shown signs of revival, buoyed by a resurgence in tourism, a thriving student population, and increased evening activities. Improvements in transport and parking costs which have fallen over the past two years, have also contributed to reinvigorating the CBD.

Adelaide's commercial property market presents a mixed outlook. The office sector grapples with long-standing challenges, exacerbated by new completions that have pushed vacancy rates to 17.5 per cent. In contrast, retail occupancy in prime areas remains strong. The central Rundle Mall boasts an impressive 6 per cent vacancy rate, offering a diverse mix of clothing & soft goods, and personal items that cater to weekend shoppers.

However, student life remains busy on Hindley Street despite higher vacancies (13.7 per cent). Obstacles in its recovery are due to lower asset quality and a less diverse tenant mix dominated by food outlets, pubs and services.

Brisbane's CBD stands out as the country's strongest office market, boasting a low 9.5 per cent vacancy rate that has injected new life into the city centre. The retail landscape, while robust, shows some signs of uncertainty with a 13 per cent vacancy rate in prime areas.

A shift in retail dynamics is evident, with luxury brands concentrating in the northern end of Queen Street Mall and Edward Street, while southern areas experience increased vacancies fuelled by Myer’s vacation last year. Weekend activity remains a challenge, but initiatives like discounted public transport aim to boost city visitation. Notably, Brisbane has become Australia's most expensive city for CBD parking.

Perth's commercial property scene has been quietly evolving. The office market, enhanced by high-quality new developments, shows a vacancy rate of 15.5 per cent. The retail sector keeps pace with a 14 per cent vacancy rate, with encouraging signs of expansion, particularly in the Murray Street Mall precinct crossing William Street. The completion of Raine Square has introduced premium tenancies to the market. While Murray Street maintains sub 10 per cent vacancies, Hay Street Mall faces ongoing challenges.

The city's retail landscape is influenced by the quality of assets, with newer or refurbished properties attracting both tenants and customers. Improving transport and affordable parking, aided by reinvigorated nighttime activity keeping retail more vibrant than ever before in the Perth core area.

Canberra's unique government-centric economy presents distinct challenges for its commercial property market. Despite a low office vacancy rate of 9.6 per cent, actual occupancy is under pressure due to the prevalence of remote work in the public sector. This reduced weekday foot traffic severely impacts the retail sector, resulting in a high 15.5 per cent vacancy rate. Small businesses, particularly in food and beverage, struggle with limited weekday trade.

The retail landscape is further complicated by strata-titled properties with minimal capital improvements, leading to a decline in the quality of retail offerings outside major shopping centres. The city's town centre model also contributes to limited weekend visitation, casting uncertainty over the future of CBD retail.

Australia's major CBDs present a diverse commercial property landscape in 2024. While some cities like Sydney and Brisbane show resilience in specific sectors, others face ongoing challenges in adapting to post-pandemic work patterns and changing consumer behaviours. The interplay between office occupancy, retail performance, and urban vibrancy continues to shape the commercial property dynamics across the nation's urban centres.

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