Sydney leads retail recovery while office markets remain subdued

Sydney has emerged as Australia’s retail powerhouse, while office markets across the country continue to face challenges in the post-pandemic environment, according to new research.

Ray White Head of Research, Vanessa Rader, said Sydney’s CBD retail sector is performing exceptionally well, with vacancy rates at just 5.4 per cent in prime areas.

“Sydney has become a luxury retail hub, with international brands occupying a quarter of core shopfronts,” Ms Rader said. “Despite this retail success, Sydney’s office market recovery has been sluggish post-pandemic, with vacancy rates at 11.6 per cent.”

Ms Rader said Melbourne’s commercial landscape shows significant contrasts, with the upscale “Paris End” maintaining a 10 per cent vacancy rate despite workforce challenges.

“Melbourne faces the most significant challenges in office occupancy nationwide, with businesses struggling to entice employees back after prolonged pandemic lockdowns,” she said.

Brisbane has shown remarkable resilience in its office sector, according to Ms Rader.

“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,” she said. “The retail landscape, while robust, shows some signs of uncertainty with a 13 per cent vacancy rate in prime areas.”

Ms Rader said 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,” she said.

Canberra faces unique challenges according to Ms Rader, with its government-centric economy affecting both sectors.

“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,” she said. “This reduced weekday foot traffic severely impacts the retail sector, resulting in a high 15.5 per cent vacancy rate.”

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