The empty shops that plagued a third of Melbourne’s CBD four to five years ago are now few and far between as vacancy rates plummet and a surge in restaurant and bar openings fills half of the city’s retail space.
Shop vacancies in the city centre have fallen steadily from their peak above 30 per cent during the pandemic, and are now sitting at 4.6 per cent, edging down from 6.1 per cent in 2025.
Commercial real estate agency Fitzroys said hospitality, food, beverage and entertainment businesses are the driving interest in street-facing shops, including those in arcades and shopping centres.
“Over the past year, the segment increased in representation of the overall tenancy mix to 49.4 per cent,” its latest annual Walk the CBD report states.
The number of empty shops in central Melbourne is now at a long-term low.
Swanston Street, which during the pandemic was a minefield of empty storefronts, has a vacancy rate of just 1.9 per cent. Nearby on Little Bourke Street, vacancy has tightened to 1.1 per cent.
The long-awaited completion of Melbourne’s Metro Tunnel network spurred leasing activity around the Town Hall and State Library station entrances which disgorge thousands of passengers daily. “Since it’s opened, it’s just absolutely booming around those particular parts of the city,” Fitzroys leasing agent James Lockwood said.
Building owners at the top end of Swanston Street near RMIT University are commanding rents around $5000 a square metre. Further south along the street, rents are closer to $3500.
“We’re starting to see those green shoots where rent is starting to increase. It’s a pretty simple supply and demand proposition. There’s less vacancy so, obviously, with more competition rents are starting to grow,” Lockwood said.
Chinatown’s vacancy last year was 6.6 per cent. This year, it’s fallen to 3.5 per cent and the appetite from businesses normally wanting to lease in the eastern half of Little Bourke Street is spilling over into Swanston, Russell, Exhibition and Lonsdale streets, he said.
Leasing is strong in Bourke Street Mall. Two upmarket perfume purveyors recently signed in Royal Arcade. Creed Perfume took a 32 square metre space, paying around $3000 per square metre, and luxury French fragrance house Parfums De Marly set up shop in a 61 square metre space for around $2500 per square metre.
The rosier retail outlook, however, hasn’t lifted upmarket Collins Street. More shops were empty (6 per cent) on the street that hosts luxury labels like Emporio Armani, Van Cleef & Arpels and Jimmy Choo than the year before. Nearby, in Exhibition Street vacancy was also higher.
Pascal Huron has operated his small French casse-croûte in Little Collins Street off Coromandel Place, selling baguettes to hungry lunchtime workers, for nearly five months.
It took him nearly two years to find the right space, a small 17 square metre shopfront. “I wanted to bring a real French casse-croûte to the Paris centre of Melbourne – something small, fast and good quality for the workers around here. I didn’t want a big, expensive cafe. In a small space, I can keep the costs under control. You’ve got less rent, staff, and it’s easier to work,” Huron said.
He says city workers are returning to office towers nearby, and generally working more days in the week. “They tend to work three days. Before, a couple of years ago, it was more like one to two days in town,” he said. “I’m getting busier and busier every day, so I’m very happy.”
Recent analysis by Bloomberg Intelligence backs Huron’s experience.
It shows more than 80 per cent of workers in Sydney and Melbourne are in the office at least three days a week. Occupancy is slowly ticking up, to around 63 per cent at last count, but vacancy in the city’s towers is still historically high at 19 per cent.
Lockwood said retailers are not as reliant on office workers as they were in the past. “It’s a 24/7 CBD,” he said. Traders are now more active midweek and on weekends.
“The balance of more people entering the city over Friday nights and the weekends, and their combined spending power, is outweighing the lower visitor numbers being recorded on Mondays and Fridays,” he said.
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Simon Johanson is a business journalist at The Age and The Sydney Morning Herald.Connect via X or email.