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Australian capital cities demonstrate diverse commercial property market conditions in 2024. Sydney's retail strength contrasts with office sector challenges, while other capitals show varied recovery patterns across both sectors.
Australian capital cities show varied commercial property performance as markets adapt to post-pandemic conditions. Each city faces distinct challenges and opportunities across retail and office sectors.
Sydney market dynamics
Ray White Head of Research, Vanessa Rader, said Sydney’s CBD retail sector is performing exceptionally well, with vacancy rates at just 5.4 per cent in prime areas.
“Sydney has become a luxury retail hub, with international brands occupying a quarter of core shopfronts,” Ms Rader said. “Despite this retail success, Sydney’s office market recovery has been sluggish post-pandemic, with vacancy rates at 11.6 per cent.”
The city’s retail sector demonstrates particular strength in prime locations. Luxury retailers maintain strong presence in core areas, supporting low vacancy rates of 5.4 per cent. International brands drive demand for premium retail space, reinforcing Sydney’s position as a global shopping destination.
Melbourne’s mixed performance
Melbourne presents contrasting market conditions across different precincts. “Melbourne faces the most significant challenges in office occupancy nationwide, with businesses struggling to entice employees back after prolonged pandemic lockdowns,” Ms Rader said.
The prestigious “Paris End” maintains relative stability with 10 per cent vacancy rates. This performance stands out against broader market challenges. Extended lockdown periods continue to impact workplace return rates, affecting both office and retail sectors.
Brisbane’s market resilience
The Queensland capital shows strong fundamentals in its commercial property market. “Brisbane’s CBD stands out as the country’s strongest office market, boasting a low 9.5 per cent vacancy rate that has injected new life into the city centre,” Ms Rader said.
Despite office sector strength, retail faces some pressures. “The retail landscape, while robust, shows some signs of uncertainty with a 13 per cent vacancy rate in prime areas,” she notes. The disparity between office and retail performance suggests varying recovery rates across sectors.
Perth’s market evolution
Western Australia’s capital demonstrates steady market development. “The office market, enhanced by high-quality new developments, shows a vacancy rate of 15.5 per cent. The retail sector keeps pace with a 14 per cent vacancy rate, with encouraging signs of expansion,” Ms Rader said.
New office developments lift overall market quality. Retail expansion signals growing business confidence. Both sectors show potential for improvement as market conditions evolve.
Canberra’s unique position
The national capital’s government-focused economy creates specific market conditions. “Despite a low office vacancy rate of 9.6 per cent, actual occupancy is under pressure due to the prevalence of remote work in the public sector,” Ms Rader said.
Public sector work patterns significantly impact retail performance. “This reduced weekday foot traffic severely impacts the retail sector, resulting in a high 15.5 per cent vacancy rate,” she notes. The connection between office occupancy and retail trade remains particularly strong in Canberra.
Further questions
What drives luxury retail concentration in Sydney?
How do public sector work patterns affect commercial property?
What role does new office development play in vacancy rates?
Why do retail vacancy rates vary between cities?
What impacts post-pandemic office occupancy?
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