According to new research from JLL, CBD locations have seen the strongest recovery, with vacancy rates dropping from 11.6 per cent to 10 per cent, representing the largest decrease across all retail formats at 1.6 percentage points.
Neighbourhood centres also showed significant improvement, with rates declining from 5.9 per cent to 4.9 per cent.
James Hayward, JLL Research Analyst, said the sector has been holding strong last year.
“The retail sector has demonstrated resilience over 2024. CBD locations, in particular, have shown a strong recovery, with vacancy rates dropping from 11.6 per cent to 10 per cent,” Mr Hayward said.
“This significant improvement signals a revitalisation of our urban centres and renewed confidence among retailers.”
Regional shopping centres saw vacancy rates drop by 0.8 percentage points to 1.7 per cent, while sub-regional centres experienced a decline of 0.6 percentage points to 4.2 per cent.
Sydney emerged as the standout performer among major cities, recording the lowest vacancy rate at 3.9 per cent across all asset sub-sectors, representing a significant 1.3 percentage point decrease year-on-year.
The average geographical vacancy rate, excluding Canberra, stands at 5.2 per cent.
While most major cities saw improvements, Perth continues to face challenges with the highest vacancy rate at 7.8 per cent.
Brisbane was the only city to record a slight increase in vacancy, up 0.1 percentage points to 5.3 per cent. Meanwhile, Melbourne’s vacancy rate decreased by 0.8 percentage points to 4.1 per cent, and Adelaide saw a 0.7 percentage point drop to 5.1 per cent.
Several factors have contributed to this positive trend, including improved consumer sentiment, with discretionary spending up 2.4 per cent year-on-year in December 2024.
A 25-basis point cut in the official cash rate by the Reserve Bank of Australia in February has also stimulated economic activity.
Limited new supply has played a significant role in the market’s recovery, with 2024 recording the second-lowest level of Australian retail completions since 1989.
“The scarcity of new retail developments, driven by elevated construction costs, is creating a unique market dynamic,” Mr Hayward said.
“It also offers opportunities for existing assets to capture increased demand.”
Lee McLaughlin, JLL’s Head of Retail Leasing & Tenant Representation, Property and Asset Management, said that retailers and centre managers have successfully adapted to changing market conditions.
“The sentiment in the leasing market is decidedly positive,” Ms McLaughlin said.
“Retailers and centre managers have adapted well to changing market conditions and consumer behaviours.
“Their proactive strategies are now yielding tangible results, as evidenced by the declining vacancy rates across most formats and locations.”
