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In Melbourne, vacancies across all three retail categories fell over the last six months of 2023. The largest recorded declines were seen in laneways and arcades, and strip retail, at 3.6 per cent and 3.5 per cent respectively.
CBRE director, retail leasing, Jason Orenbuch said Melbourne’s CBD was undergoing significant change, with major developments taking place throughout the city.
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“One of the most notable is the new Metro Tunnel project, which will see new stations sprawled from north to south and including a number of new retail outlets throughout”, Orenbuch said.
“Multiple other arcades and significant parts of existing centres were undergoing major redevelopment in the last six months of 2023.” These developments are expected to entice shoppers back to the CBD in the coming year.
On the investment side, a surge in demand from small to medium funds, syndicates and private investors is offsetting a drop in traditionally dominant institutional capital.
Colliers managing director of retail capital markets Lachlan MacGillivray said that while market fluctuations saw institutional capital adopt a more cautious approach, other funds, syndicates and private investors came back to the market.
“Robust deal flow of $6.28 billion last year and heightened interest from fund/syndicate and private investors is due to strong asset performance and major undersupply of retail space, complemented by quality leases and strong tenant demand,” MacGillivray said.
“On-the-ground insights from major retail investors indicate a looming groundswell of activity which could lead to quality asset demand outstripping supply of assets in 2024.”
This includes more than $1 billion in assets currently under due diligence, as “counter-cyclical opportunities to acquire high-performing centres maintain relative value attraction,” he said.
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