Revealed: Brisbane retail vacancies yet to recover from Covid hit

Brisbane’s retail heart is still battling major challenges, a new report reveals, with the sector struggling to return to pre-pandemic levels, but CBD office vacancies have tightened.

(Clockwise from top left) Uptown has been quiet since Myer left; Griffith University will turn the old Treasury building into a new campus; retail is still in the doldrums; Andrew Baturo is confident about the inner-city hospitality scene.

Brisbane’s retail heart is still battling major challenges, a new report reveals, but there’s good news for the unit and office markets, tourism, the health sector and education.

The Committee For Brisbane’s latest Vitality Report found office vacancies have begun tightening and new towers were planned to take advantage of demand, while the residential unit sector continued to rapidly expand.

But retail was still struggling, with the amount of major centre floor space stuck at the lowest level since 2018 and the vacancy rate was 19.2 per cent, down from last year but still way above pre-Covid levels.

“Super prime’’ retail rents were also well below the $4000/sqm owners could charge in 2018 and the number of new retail and food businesses has risen, but only by 10 per cent in five years.

Developers must be sensing better times ahead, however, with 103,000 sqm of retail floor space under construction, more than double the amount from 2019-2023.

Top levels of Uptown, formerly the Myer Centre, which has been very quiet since Myer vacated. Picture: Lyndon Mechielsen/Courier Mail

QUT retail expert Prof Gary Mortimer said the top end of Queen St Mall was now very tired, with activity shifting to the bottom end where premium shops on Edward St and Queens Plaza were the only bright spots.

While Queen’s Wharf could help turn things around in that area, at the moment there were only empty shops.

“I was in Uptown (formerly the Myer Centre) last week. Fourteen months since the major tenant (Myer) moved out it’s done nothing, it’s a compilation of boarded up shops, casual tenancies and deactivated activation sites,’’ he said.

“The 50c fares have helped persuade office workers to come back but the basic problem is people don’t want to come in to do shopping, they prefer to go somewhere like Carindale where it’s undercover, airconditioned and you can park (cheaply).

“People pretty much only come in (to the CBD) to buy a suit or a nice pair of shoes.’’

Professor Gary Mortimer from QUT’s Business School says shoppers often now come into the CBD only for high-end offerings.

However he said food outlets, particularly at night, had been booming for a long while in Fortitude Valley and Howard Smith Wharves and that was likely to spread to the CBD.

“When the Kangaroo Point green bridge opens that will activate the bottom end of Edward St and Eagle St for restaurants, particularly at night,’’ he said.

The Vitality rpeort found train trips, measured at Roma St and Central stations, were still only 20,255 per day or one-third less than pre-Covid.

But pedestrian movements in the Queen St Mall had improved, possibly due to 50c fares.

In better news, new office space had shot up nearly threefold since 2019, taking total inner-city office space to 3.15m sqm, with vacancies mostly in lower-quality buildings.

Latest figures, from July, put the commercial vacancy rate at 9.5 per cent, almost half the rate eight years ago.

Almost 89,000 sqm of new space was under construction and another 439,000 sqm proposed and approved.

“The Brisbane inner city office market has rebounded faster and further than many other world cities,’’ the Vitality Report said.

“It is outperforming other Australian capitals too, with vacancies falling to decade lows and premium rents increasing.

“This was something few expected in the depths of Covid lockdowns and is testament to the resilience and appeal of the inner-city precinct.’’

Andrew Baturo of Tillerman, Libertine, Popolo, The Gresham and Walter's Steakhouse. Picture: David Clark

The number of retail, accommodation and food businesses has edged up since 2018, according to the report.

“When we look back I think we’ll say this was the critical point,’’ Walter’s Steakhouse owner Andrew Baturo said.

“I am investing, and will continue to invest in the Brisbane hospitality arena, because I know what it is capable of, I know there is massive potential there.’’

Tourism numbers have also struggled to bounce back, with total attendance at venues such as the Gabba, convention centre and the Gallery of Modern Art at six million.

That was down from the 7 million in 2018/19 but a steady improvement each year since lockdown.

Business and conventions have been driving the sector, which last year recorded 3.7m room nights and $815m in revenue.

The report did not count crowd numbers at the Tivoli, Fortitude Music Hall and Riverstage, however.

Aria residential manager Michael Hurley at a CBD penthouse apartment. Picture: David Kelly

Hotel rooms have now soared past the 13,000 milestone, an all-time high, with more than half in the CBD followed by Spring Hill.

Commercial rooms still dominated, with AirBnBs not a major player in the inner-city.

Emporium South Bank owners Anthony and Francine John said Brisbane had outperformed much of the rest of the nation and was emerging as a major destination in its own right.

“Guests are increasingly seeking to indulge in luxury experiences to celebrate life’s milestones,’’ Mr John said.

The number of people living in the inner city has hit 73,512, equivalent to the city of Rockhampton.

With $308m of building approvals in the pipeline, that number was set to rise sharply as vacancy rates have finally eased, from an all-time low, and rents have stabilised.

Aria Property Group, one of the biggest developers in the inner-city, particularly in South Brisbane, said delivering new housing stock had been challenging.

But it was finetuning its processes and in the near future would focus on quality boutique residential, retail conversions and refurbishments in the Fish Lane precinct.

“While Brisbane enjoys strong demand, driven by interstate and overseas migration, it has been difficult to deliver supply for a variety of reasons,’’ Aria residential manager Michael Hurley said.

The Vitality report found the education sector had now become one of the biggest drivers of the inner-city economy, employing 13,000 people and with 55,000 students from childcare, primary and secondary schooling, training colleges and universities.

After a boom in construction in recent years, new building has tapered off with the Brisbane Girls Grammar School’s new junior years building on Gregory Tce the major project under way at the moment.

Students Emily Khan and Caitlin McNee outside the old Treasury building which Griffith University has bought. Picture: Steve Pohlner

But Griffith University has begun planning for a major campus within the old Treasury building.

Health was also a major employer, with the Vitality Report calculating that 33,000 people worked in the sector in the inner city, generating $2.87bn in activity.

One of the biggest projects finished in recent years and the first new hospital in Spring Hill in decades, Spring Hill Health and Innovation Centre, was developed by Silverstone to meet growing demand in the suburb.

The 10-storey (plus rooftop level) building fronting Boundary St featured over-size lifts, ambulance bays and large floor areas.

The Mater precinct and the sprawling St Vincents Kangaroo Point site both have long-term masterplans in place with major development earmarked in coming years.

“There has been steady growth in the number of health and social assistance businesses in the inner city, with no Covid-related downturn,’’ the Vitality Report said.

“The majority of businesses are in Spring Hill, the great majority of hospital beds are in South

Brisbane and the occupation that employs the most is nursing, followed by GPs.’’

Originally published as Revealed: Brisbane retail vacancies yet to recover from Covid hit