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Sydney and Brisbane have been challenged by steep commercial rents while Adelaide, Melbourne and Perth continue to perform strongly.
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Post-COVID period sees mixed performance across capital cities
27 March 2024
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Recent data from CreditorWatch reveals that Adelaide has outperformed its easter seaboard counterparts, while Perth has also performed strongly.
The report by CreditorWatch, Capital City CBDs Best and Worst Movers, indicated that Adelaide CBD businesses have remained resilient since the start of the pandemic.
“Adelaide CBD businesses have long been reliant on their domestic residents and workforce, and the numbers of these haven’t changed dramatically since before COVID-19,” the report stated.
“Commercial rents and property prices in the Adelaide CBD are also relatively affordable, and this has also helped businesses since interest rates have risen, relative to other CBDs.”
Residents have also benefited from relatively low residential property prices and rents.
The Perth CBD has also improved its place on the CreditorWatch Business Risk Index compared to where it was pre-pandemic, meaning it is a relatively safer location for businesses now.
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“The economy of Western Australia is performing remarkably well thanks to the strength of the mining industry, and much like the Adelaide CBD, it is domestic workers and visitors that sustain Perth CBD businesses,” said the credit rating agency.
“Given Perth was the least impacted city by COVID-19 lockdowns, it is unsurprising that businesses in its CBD are performing well by national standards.”
While Melbourne CBD experienced drastic lockdowns during the pandemic, the CBD has now bounced back strongly.
CreditorWatch said Melbourne CBD has also improved its index from 29.5 in February 2020 to 32.8 in February 2024, meaning it is now a less risky location to operate a business.
“Foot traffic in Melbourne has returned to pre-COVID levels, however the timing has changed, with weekends now busier than most weekdays,” the agency said.
“The CBD is still seeing fewer office workers visit than pre-COVID, but this is being offset by more leisure visitors both during the week and on weekends. Melbourne CBD also has a large student population, and international student numbers are higher than ever before.”
The Sydney and Brisbane CBDs have both dropped down the Business Risk Index from February 2020 to February 2024, meaning businesses in these locations now facing greater challenges and risks.
The business risk index for Brisbane dropped from 30.4 down to 20.8, while Sydney dropped from 34.6 to 23.8.
“The Sydney CBD has much higher office vacancy now versus pre-COVID times, meaning fewer office workers, as well as many more office workers working from home a few days a week, particularly on Mondays and Fridays,” said CreditorWatch.
“While Sydney has had a similar number of concerts as Melbourne, most of the bigger events are held at the Olympic Park venues, well away from the CBD. Sydney CBD also has very few residents able to sustain businesses when office workers are not there.”
The Brisbane CBD also has high office vacancy rates at the moment and is a unique city in that it has large tourism draws to the north and south: the Sunshine Coast and Gold Coast.
“Both areas act to draw tourists away from the CBD, particularly on weekends and school holidays.”
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