Pandemic sets back Melbourne CBD two decades

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Pandemic sets back Melbourne CBD two decades


“Over the next four to six months … it could be 660,000 to 735,000. Which means the city would be as busy as it was in 2004 or 2009.”

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Melbourne’s population in 2009 was 3.85 million, compared to 5.15 million today. The Eastlink motorway had just been completed; the M1 upgrade began and Southern Cross Station and the Eureka Tower were still new.

Council foot traffic trackers at several key locations around town this week showed a clear increase in pedestrian numbers — of between 14 and 20 per cent — from Monday’s morning peak to Tuesday’s and a sharp drop-off between Thursday morning and Friday.

Mr Rawnsley said the emerging trend of office workers preferring to commute only on Tuesdays, Wednesdays and Thursdays was one of two key challenges facing the city, along with the task of bringing side streets and laneways back to life.

”That’s part of this difficult period as businesses try to work out what demand is. Customers look for what’s on offer, what’s open and what’s the vibrancy they’re looking for. It’s going to be a while before the city finds that equilibrium,” he said.

“To make it even more complicated, you’ve got this clear pattern now of Mondays and Fridays — especially Mondays — being quieter days and how businesses are going to deal with that. Do they not open? Do they offer a limited menu, do they try to attract people on those off days to try to bolster the tills?”

Meanwhile, office occupiers in the city are trying to offload 130,000 square metres of unused or unwanted office space on the sublease market, according to The Property Council, and the general vacancy rate is just under 12 per cent — an improvement from mid-2021 but still close to an all-time high and well above the historical average of 10 per cent.

Property Council Victorian executive director Danni Hunter said the job of getting people back into the city was urgent.

“The city’s lifeblood are people — office workers, residents, students and visitors. We have to do everything in our power to bring people back to Melbourne and quickly,” Ms Hunter said.

SGS Economics senior associate Marcia Keegan said the three-day working-from-the-office pattern was a major, and potentially permanent, obstacle to bringing activity back to 2019 levels.

“We’re not going to go straight back to 2019 levels right away,” she said.

“If it turns out that the majority of people are loving having extra time at home … then we just have to accept that economic activity in the CBD has had a downturn and it’s not going to completely rebound from that.

“If Melbourne’s population and economy continues to go on its growth trajectory, some of that retail and office space it has been effectively abandoned due to lack of demand will be absorbed, in time.

“But if people prefer to work from home and that works for their business and works for individuals, then we just have to accept that that’s how it’s going to be.”

Jarrad Cuff’s tailoring business Mr Cuff is occupying a ground floor unit rent-free in Howey Place, off Little Collins Street, as part of a City of Melbourne scheme to fill vacant shopfronts.

Mr Cuff said the 54-square-metre unit — with no toilet — commanded an annual rent of $95,000 before the pandemic.

The tailor said the Shopfront Activation Program had been a valuable opportunity for his business, which had previously been run out of a bedroom in his Thornbury home.

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But he does not believe the pre-COVID market conditions are ever coming back to the CBD and that the approach to business that had underpinned the precinct for decades needed to be re-thought.

“I know a lot of the businesses that are not going to continue in the city because they can run online for free and rather than have to pay for a shopfront, they can just pay for an advertising campaign on social media that will have the same effect,” Mr Cuff said. “I know five or six businesses who are doing that.”

The council said there were encouraging signs around town this week, with foot traffic on Thursday on Bourke Street Bridge outside Southern Cross Station up 95 per cent on the previous week and orientation week university celebrations pushed pedestrian activity in the University of Melbourne precinct up by 117 per cent.

There was also strong growth in activity at nightlife hubs on Lygon Street, Southbank and Docklands, the council reported.

Lord mayor Sally Capp said the council was focused on enticing commuters and other visitors back to the city with initiatives like Melbourne Money, with the third phase of the subsidy payment set to launch next week.

“We know we need to earn people’s commute, Cr Capp said.

“We want people to be pounding the city pavement and capitalising on the incredible business and entertainment offers that cannot be accessed anywhere else in Australia.”

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