Melbourne commercial real estate: CBD activity rebounds

“With COVID lockdowns and restrictions in the rearview mirror, we’re expecting office occupancy to lift steadily throughout 2023. That will also have a positive effect on daytime trade, and will spill over further into nighttime activity throughout the week,” Lockwood said.


The Fitzroys’ data show the CBD core remained relatively strong throughout 2022, with vacancies in the broader block bound by La Trobe, Russell, Flinders, and Elizabeth streets at 17.1 per cent.

The northern end around La Trobe Street also performed well, in line with the gradual return of university students to Melbourne University and RMIT.

La Trobe Street’s prime sector vacancy rate is a relatively low 9.1 per cent, and is expected to be a major beneficiary of the return of international students. Also recording single-digit vacancies is the core of Flinders Street, from Elizabeth to Russell Street – opposite Flinders Street train station and Federation Square – at just 5.4 per cent.

The east end of Collins Street recorded by far the lowest vacancies of any precinct in the CBD, at just 2.5 per cent.

“The east end is popular for high-end retail and, in particular, hospitality operators,” Lockwood said. “Both of these sectors have been remarkably resilient over the past three years.”


Within the east end precinct, Flinders Lane, which had a vacancy rate of 13.2 per cent, continues to thrive as a culinary destination, the report states. “We expect the east end to be particularly busy for hospitality tenants in 2023,” Lockwood said.

Fitzroys associate agent Travis Keenan said the strength of the CBD market is evidenced by no less than eight new retail leasing deals across the city inked by the Fitzroys’ CBD leasing team, with a mix of food and beverage, specialty and service tenants in the past few weeks.

“There are multiple tenants with a successful track record of CBD trade that have witnessed the post-COVID rebound in [the] CBD, and have decided to invest further in the city and open new locations,” he said.

Melbourne precinct vacancy rates

Elizabeth Street – Flinders to Latrobe: 22 per cent
Swanston Street – Flinders to Latrobe: 18.7 per cent
Little Collins Street – Elizabeth to Spring: 18.5 per cent
Collins Street West – Spencer to Swanston: 17.8 per cent
Retail core – Latrobe, Russell, Flinders, Elizabeth: 17.1 per cent
Russell Street – Flinders to Latrobe: 16.5 per cent
Bourke Street – Swanston to Spring: 14.3 per cent
Bourke Street Mall – Swanston to Elizabeth: 13.8 per cent
Chinatown – Lonsdale, Spring, Bourke and Swanston: 13.7 per cent
Flinders Lane – Elizabeth to Spring: 13.2 per cent
Latrobe Street – Elizabeth to Russell: 9 per cent
Flinders Street – Elizabeth to Russell: 5.4 per cent
Collins Street East– Swanston to Spring: 2.5 per cent

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