Brisbane CBD recorded a vacancy of 18.7 per cent, the second highest in Australia

The Brisbane CBD retail vacancy rate remains stubbornly high despite a slight tightening and workers returning to the city.

Brisbane’s CBD retail vacancy tightened in the second half of 2023 but remained the second worse out of the major Australian capital cities.

The city centre recorded a vacancy rate of 18.7 per cent, from 19.5 per cent in the first half of last year, according to CBRE’s retail vacancy report.

CBRE associate director, Retail Leasing, Tanaka Jabangwe said the tightening could be

attributed to a tenant flight-to-quality with high demand for flagship stores in prime

positions and an overall increase in CBD visitation.

“Other contributing factors to note include a solid return to office, strong population growth and a steady improvement of international tourism,” he said.

Arcade retail vacancy increased slightly in the second half to 15.7 per cent which can be attributed to a tenant flight-to-quality, evidenced across Australia’s commercial real estate market.

“Brisbane tenants previously occupying lower-grade arcade space, are focusing on site fundamentals that offer better exposure which correlates with a higher capacity for revenue growth and opting to lease higher grade assets in core CBD locations,” Mr Jabangwe said.

Major redevelopments are set to revitalise the Brisbane CBD, including revamps of integral retail hubs such as the Eagle Street Pier redevelopment and the introduction of new retail space in developments such as Queen’s Wharf.

Additionally, the underground arcade of Post Office Square is also undergoing redevelopment, which is expected to increase demand for new food retail tenants, particularly for quick

service restaurant space.

The Brisbane CBD recorded a retail vacancy rate of 18.7 per cent in the second half of 2023.

he highlighted the CBDs of four of Australia’s largest capital cities which recorded at 12.7 per cent vacancy compared to 15 per cent in the first half.

Of those four cities, Melbourne continues to have the lowest retail vacancy in the country at 7.37 per cent as well as the largest vacancy reduction of 330 basis points.

The Sydney CBD also recorded a decline, of 275bps, resulting in an 8.1 per cent vacancy while Perth was 25.3 per cent respectively.

CBRE’s head of retail research Amita Mehra said overall, vacancy has tightened.

“The return to office, coupled with increased tourism and international student inflows, has led to more foot traffic in CBDs, supporting occupier appetite for floorspace within these markets.,” she said.

Cost of living pressures continued to decline over H2 2023 with the CPI dropping from 6 per cent to 4.1 per cent in the December quarter.

Despite the relatively stagnant growth seen in discretionary spending over the year, overall levels have remained stable. The report showed the total retail sales in Australia were near $425bn in 2023.

CBRE’s head of Retail Property Management & Leasing Sheree Griff said Australia’s 2024 retail landscape was positive, despite cost-of-living pressures.

“Bricks and mortar spaces remain highly desirable to retailers in ensuring their brands are vibrant and have a purposeful vibe that fosters a culture of innovation, as evidenced by the current flight to quality trend,” she said.

“Retail sales growth is attributed to consumers seeking to look good and feel good, with the strongest sales being reported in the wellness sector, cafes and restaurants.

“Our view for 2024 is that leasing growth will occur across all markets as retailers partner with landlords to evolve and meet the live, work, and play needs of consumers.”

Originally published as Brisbane CBD recorded a vacancy of 18.7 per cent, the second highest in Australia