Melbourne's CBD retail defies a deteriorating office market, led by Collins Street's luxury strength

Melbourne presents the most striking divergence of any capital in this survey. CBD retail vacancy has continued to tighten sharply, falling to 7.6 per cent in 2026 from 8.8 per cent in 2025 and 10.0 per cent in 2024, even as the office market moves firmly in the opposite direction, with vacancy climbing to 18.9 per cent from 17.9 per cent. Melbourne's office fundamentals remain the weakest of any major Australian CBD, yet retail performance has continued to improve regardless, reinforcing that Melbourne's core is increasingly being carried by its retail and lifestyle offer rather than office attendance. Parking data adds weight to this picture, with Melbourne the only major capital where daily casual rates now sit below where they were 12 years ago and operators offering the deepest discounts of any Australian city. Cheap and heavily discounted parking would ordinarily point to weak demand, yet retail vacancy tells a different story, suggesting the affordability of getting into the CBD is helping draw shoppers and diners in even as office workers stay away. 

The tenant mix helps explain how. Other personal and household goods retailing, largely luxury goods such as jewellery, remains one of the largest categories in the core at 19.4 per cent, only modestly down from 21.1 per cent in 2024, a share unmatched by most other capitals and reflective of Melbourne's enduring position as the nation's premium fashion and luxury retail destination. Clothing and soft goods remains the single largest category at 21.2 per cent, easing slightly from 23.0 per cent in 2024 but still dominant. Cafés and restaurants have grown their footprint materially to 17.3 per cent from 14.9 per cent two years ago, even after easing back from an 18.0 per cent peak in 2025. Supermarket and grocery tenancies notably convenience store growth continues to climb steadily, up to 5.0 per cent from 3.5 per cent.