Shops, cafes and restaurants in Melbourne’s CBD had a busy winter, with new figures showing rising sales in June, July and August, and the lowest retail vacancy rate of any Australian capital city.
Real estate agency CBRE said 6.9 per cent of shops in Melbourne’s major city strips, shopping centres, laneways and arcades were empty in June — the lowest vacancy rate across all capital cities – and predicted more shops will be occupied when the Metro Tunnel opens next year.
Victoria Street near Queen Victoria Market.Credit: Penny Stephens
Food, beverage and fashion retailers continued to increase their presence, accounting for more than half of all shops between La Trobe and Flinders streets north to south, and Spring and Queen streets east to west.
Kate Bailey, CBRE head of retail and alternatives research in Australia, said hospitality is “a big part of our culture in the Melbourne CBD – much higher than anywhere else in the country”.
Meanwhile, transaction volumes at CBD restaurants and retailers grew by 5.6 per cent year-on-year over winter, according to Square, which provides payment terminals and software to small businesses. In August alone, transaction volumes at restaurants and retailers grew by 24 per cent year-on-year.
But spending has spread to the suburbs since the pandemic. The CBD contributed about 80 per cent of all Melbourne’s spending volume in 2019 and now accounts for 69 per cent, Square said.
“Over the past few years, there’s been an economic decentralisation as people move further afield or spend less time in the CBD due to remote work measures,” said Colin Birney, head of business development at Square.
“The glass-half-full thinking is that Melbourne is growing, inside and outside the CBD, and more communities outside the CBD are enjoying the wealth because of that.”
Theatres, clothing stores, chocolate and confectionery stores, and bookshops also reported strong revenue and sales growth in winter, National Australia Bank reported. Sales almost doubled at theatres in the CBD, while clothing store sales jumped 39 per cent, the bank’s merchant terminals showed. Sales grew by 7 per cent in CBD pubs and bars, and confectionery sales increased by 34 per cent.
“Melbourne’s CBD is full of great restaurants, quirky shopping and activities you might not find in the suburbs,” said Julie Rynski, NAB executive for business metro. “When we look at recent transaction data, we can see the attractions and culture of the big city are enticing shoppers back to the CBD.”
The Regent Theatre in Melbourne. Sales at CBD theatres almost doubled in winter, according to NAB data.Credit: Joe Armao
David Jackson, a director of the 76-year-old Melbourne menswear business Peter Jackson, said suit sales have not only recovered from the pandemic but were better than ever.
And the company’s five CBD stores have traded well during winter, with men snapping up jumpers, jackets and coats.
“The demographic profile of the city has changed. It’s more of a residential thing, less corporate. People not working five days [in the office] is a big part of that,” he said.
“There’s more weekend trade, for example, where historically there wasn’t. There’s more late-night trade, at Emporium [in the city] in particular.”
Veteran rag trader David Jackson says his business is selling more suits than ever.Credit: Justin McManus
Data from the City of Melbourne shows evening retail spending in June grew by 19 per cent year-on-year, and the weekend was now the busiest time of the week at the Queen Victoria Market.
And twilight trade was growing, with weekday activity on Swanston Street near Melbourne Central higher between 5pm and 10pm than before midday.
Rival real estate business JLL said only 4.7 per cent of CBD shopfronts were vacant in June, a rapid turnaround from a 16.7 per cent vacancy rate during the pandemic years.
“Consumers [are] drawn to the city’s food and beverage, recreation, sport and entertainment events,” said JLL research analyst Jacqueline Darwis.
“These social factors are being supplemented by strong population growth and a rebound in tourism to Melbourne.”
Persistently high numbers of employees working from home prompted NSW Premier Chris Minns to order all public servants back to the office three days a week. But Victorian Premier Jacinta Allan has said flexible work arrangements are here to stay.
At the local level, aspiring Melbourne lord mayoral candidates Arron Wood and Anthony Koutoufides are calling for CBD-based employees to work in the office at least four days a week.
Anthony Koutoufides, who is running for Lord Mayor of Melbourne, has suggested free coffee to entice workers back into the CBD.Credit: Penny Stephens
“Where are the people? People don’t come in. It’s too hard. It’s not enticing,” said Koutoufides, who has suggested free coffee for CBD workers as an incentive to come into work.
Jackson, the menswear director, said high interest rates, taxes and rents remain challenges for CBD retailers. However: “As long as you stick to your knitting and have a desire to continually improve... I think you’ll be OK.”
The Opinion newsletter is a weekly wrap of views that will challenge, champion and inform your own. Sign up here.