CBD retail vacancies soar as shoppers head to the suburbs in the wake of COVID
One in seven shopfronts along one of the CBD’s premier retail strips is vacant in the wake of COVID. But it’s a different story in the suburbs.
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The number of vacant shops along Adelaide’s premier CBD retail strips has soared in the wake of COVID-19, but it’s better news in the suburbs where confidence and retail activity is on the rise.
The latest figures from property group JLL reveal 14 per cent of stores along Hindley Street – or one in seven – are vacant, up from 8.6 per cent prior to the pandemic.
Things aren’t much better in the east end, where the vacancy rate on Rundle Street has increased from 6.3 per cent to 11.7 per cent.
Outside of the CBD, vacancies have fallen along O’Connell Street in North Adelaide, King William Road in Hyde Park and Jetty Road in Glenelg, while The Parade has held steady at 14.7 per cent.
JLL head of research Rick Warner said the benefits flowing to suburban high streets as a result of the work-from-home trend came at the expense of CBD retailers.
“The fortunes of the retail strips have followed the geography of daily expenditure,” he said.
“With the majority of Adelaide’s working-age population working from home for an extended period of time over the first half of this year, it’s been the suburban retail strips that have been the beneficiary.
“With almost no commercial activity in the city through the early COVID-19 period, it has been the CBD retail high streets that were most acutely affected.”
During the height of COVID-19 Adelaide’s east end was hit by the collapse of national brands including Tigerlily and Seafolly, which both had stores on Rundle Street.
Cibo and Flight Centre also closed their east end outlets earlier this year, while the high-profile collapse of Jock Zonfrillo’s Orana restaurant has headlined the difficulties facing hospitality operators in the city.
On a brighter note several new stores have opened on Rundle Street in recent weeks, including Nudie Jeans on the corner of Frome Street and RSPCA’s new designer op shop at the former Naked fashion store.
East End Coordination Group chairman Frank Hannon-Tan was upbeat about the precinct’s post-COVID recovery, buoyed by the recent store openings and major developments including the Crowne Plaza and Realm apartments.
“Footfall is down in the city but I am confident people will come back, especially with the warmer weather,” he said.
“There is still a lot of caution and fear around but with the hotel (Crowne Plaza) opening this week I’ve noticed a lot more people on the street.
“Ten or 11 years ago there was a shift in Rundle Street with a lot of smaller businesses making way for national and marquee brands, and those stores have really become showrooms.
“People are shopping online, and that’s accelerated, but shopping is still an important leisure activity and it’s an experiential thing, and that’s the change that needs to happen, I think.”
According to the latest Property Council figures, close to three-quarters of office workers have returned to their CBD workplaces following the easing of COVID-19 restrictions.
But Adelaide West End Association president Andrew Wallace suggests the work-from-home trend is here to stay, and called on industry groups, landlords and tenants to work together to attract people back to the city.
Hindley Street has been hit with several closures in recent months including the Gloria Jean’s
and Hudsons coffee shops.
“A lot of city workers are not back and they may never come back – working from home may become a permanent fixture for a lot people,” Mr Wallace said.
“The question is how do you respond to that, and for me it points back to the importance of the Adelaide Economic Development Agency.
“It’s really important that they work with precinct groups, landlords and the business collective to attract people back to the city.”
The Adelaide Economic Development Agency, established by the Adelaide City Council to drive economic growth across the city, will begin operating early next year.
Mr Wallace said new developments in the west end would draw more people to the precinct and help with the post-COVID recovery.
“With the Sofitel and the new Trinity Church development, and with UniSA planning to decommission its Magill campus, we’ll see more people come into the west end and there will be a need for services and retail to support that,” he said.
“But dealing with the vacancy rate in the short-term is a challenge and it’s important that groups like Renew Adelaide are properly funded to ensure things keep chugging along.”
While CBD landlords and tenants face an uphill battle in the wake of COVID-19, the pandemic has resulted in a renaissance of the suburban high street.
Vacancies on Jetty Road in Glenelg have fallen from 9.6 per cent to 6.6 per cent since last year, making it the best performing retail strip across Adelaide.
Jetty Road Mainstreet Committee chairman Con Maios said foot traffic was higher than this time last year.
“I think what’s happened is people have come down to Glenelg because it’s open air and they’ve renewed their love for Jetty Road,” he said.
“Locals are coming here rather than the city or Marion and I think shoppers are shopping local and supporting local businesses more.
“During school holidays it was going gangbusters down there – I can’t wait to see what will happen in the summer.”
Little Black Bike – Daily Grind Skate relocated to bigger premises on Jetty Road last November and recently opened another outlet in McLaren Vale.
Pete Abordi said foot traffic on Jetty Road had remained strong throughout COVID-19.
“It didn’t really quieten down too much during COVID – people can’t travel so they’re getting back into leisure activities like skating, surfing, golf and cycling,” he said.
“I’ve worked down here in Glenelg for a long time and I’ve always preferred the suburbs – it’s more convenient.
“Obviously in the city all the workers aren’t there so it’s tough. The workers are starting to go back now so who knows what could happen before Christmas – we could see a mad rush.”
Mr Warner said while vacancy rates along CBD shopping strips were likely to improve next year as more workers return to the office, other challenges were on the horizon.
“While there is a level of resilience across non-CBD retail high streets in the early COVID-19 period, it is expected that small-to-medium business failure risk will increase over the short-term as rental deferral periods negotiated with landlords expire, and additional discretional retail spending decreases as government assistance programs like JobKeeper and JobSeeker wind-back.”
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