Melbourne Retail Thrives Despite Declining Office Workers
Foot traffic is roaring back in Melbourne’s busiest shopping malls, with consumer spending showing strong growth. But what about the city’s office workers? According to Melbourne Central’s key figures, even a boost in workplace attendance will have little impact on the booming retail trade.
Melbourne’s retail scene is thriving, driven by key factors of success and strategic moves by property developers capitalizing on the trend.
Weekend Shopping Takes the Lead
At Melbourne Central, one of the city’s largest and busiest malls, shoppers are flooding in at record levels. The centre boasts around 50 million visitors annually, supported by its connection to Melbourne Central train station and its prime retail offerings.
Chris Barnett, Head of Retail at GPT (a property landlord managing $8.8 billion in assets), notes that weekend shopping habits have changed significantly in the post-COVID landscape. Shoppers are prioritizing leisure and social activities for their retail visits, with Melbourne Central witnessing its productivity and sales reach new heights.
- Key Stat: Melbourne Central draws more visitors annually than any office district in the city, aided by its position as a hub for public transit commuters.
Barnett remarked, “We’re at record numbers for sales and continue to grow, independent of weekday office attendance.” This shift comes as office attendance across Melbourne CBD remains lagging at 61% compared to pre-pandemic levels.
Melbourne’s Retailers Ride a Wave of Confidence
The latest retail sales data paints a clear picture of Melbourne’s retail success. January 2023’s retail sales saw a year-on-year increase of 3.8%. While this was slightly below December’s 4.6% holiday-season surge, the broader trend demonstrates resilience in consumer spending.
For Barnett and GPT, the evidence suggests that Melbourne’s retail growth is no anomaly. This view is echoed by Jarden investment analysts, who project consistent improvement in spending through 2025. They anticipate positive shifts as interest rates stabilize and consumer confidence steadily recovers.
Looking forward, GPT is channeling this optimism toward its redevelopment projects, particularly focusing on enhancing its retail spaces.
Scaling Up Melbourne Central and Beyond
GPT is seizing the momentum by investing in its properties, including Melbourne Central, one of its flagship retail assets. Plans are already in motion to expand the shopping complex with two additional levels, aiming to launch construction in 2024.
However, Melbourne Central is not the only site benefiting from GPT’s confidence in the retail market. The Rouse Hill Town Centre in Sydney’s north-west is undergoing a $200 million redevelopment, increasing its leasable space by 10,500 square meters. Rouse Hill’s strong community-driven retail growth highlights a regional parallel to Melbourne’s urban success.
Russell Proutt, GPT’s Chief Executive, said of the project, “Investing to bring more fashion, dining, and leisure options to high-growth areas like the Hills District was an easy decision for us.”
Why the Focus Remains on Retail
Proutt also highlighted GPT’s broader belief in the future of Australian retail. Despite a challenging decade marked by e-commerce disruption and a global pandemic, retailers are adapting to blend physical stores with online channels. Malls have transformed into “destinations” for experiences, drawing families, foodies, and fashion enthusiasts alike.
He noted that retail, especially on Melbourne’s scale, remains integral to GPT’s business strategy. “Scale matters,” Proutt stated. “Our $14 billion assets under management and self-managed properties uniquely position us to excel in retail investment.”
What’s Behind Melbourne Retail’s Resilience?
Retailers and property managers credit Melbourne’s demographic advantages as central to its success. Key factors include a growing population, GDP growth, and spending trends across multiple demographics. While households face cost-of-living pressures, retail shopping remains a high priority.
Furthermore, the blending of Melbourne’s urban infrastructure—such as its efficient transit networks and iconic laneway culture—adds an experiential layer that makes malls like Melbourne Central a magnet for locals and tourists alike.
Resilient Retail: Lessons for Australia
Melbourne retail’s ongoing successes offer a broader lesson for Australia’s commercial property industry. While daily office attendance is yet to recover in full, retail represents a symbol of resilience and adaptability.
GPT’s investments, both at Melbourne Central and Rouse Hill, point to a strategy grounded in Australia’s unique ability to integrate physical retail with community living.
Proutt explains, “Despite some household stress, Australian retail remains buoyant thanks to population growth and strong GDP figures. Consumers continue to spend on retail products, and we see these trends continuing to improve over the next two years.”
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