With CBD on ‘life support’, businesses declare 2021 a write-off

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Businesses and landlords in Melbourne’s CBD are giving up on a recovery in 2021, concentrating instead on surviving into next year when they hope the pattern of repeated lockdowns will end.

The commercial real estate industry says the latest lockdown has left the city on “life support” and Monday’s extension has put the CBD’s fragile recovery back months, with lord mayor Sally Capp saying many businesses were fighting for survival and facing a long, slow recovery if they did manage to keep trading.

Bourke Street Mall on Monday night as the city returned to lockdown.Credit:Jason South

The warning came as the tourism industry lobby said the monthly value of domestic and international tourism to the state was down by more than $2 billion as a result of closed borders and lockdowns, while 156,000 jobs had been lost in the sector during the downturn.

The state government has promised that more help is on the way for beleaguered businesses, with Treasurer Tim Pallas and Industry Recovery Minister Martin Pakula set to announce a new support package on Wednesday.

The Property Council said Melbourne’s recent lockdowns had resulted in occupancy rates at CBD office buildings plummeting to just 12 per cent and demand for space plunging to its lowest level since the depths of the downturn in the 1990s.

The council’s Victorian executive director Danni Hunter told The Age that the picture for retail was equally grim, with 70 per cent of shops in the riverside Southgate shopping centre either vacant or “ghost tenancies” – units which were leased but not open for business.

Ms Hunter said many of the city’s large institutional landlords had accepted that their revenue expectations this year would not be achieved.

“Some of the major landlords, particularly those who are in this for the long game, they’ve put a line through revenue for 2021,” she said. “In terms of revenue expectations, 2021 is done”

Ms Hunter said Melbourne’s economic fundamentals were strong and the sector believed the city had an underlying resilience, but there was a growing impatience to see a long-term recovery plan from the state government.

“So far what we’ve seen have been incredibly important survival packages, but they haven’t thought beyond that and that’s what we’re concerned about. We need the life support super-charged.”

John Caldwell has given up hope that 2021 can be salvaged as a trading period and is concentrating on getting the two CBD branches of his health performance business through to 2022.Credit:Jason South

John Caldwell’s business, Absolute Health Performance, has branches on Little Collins Street and William Street, which provide health and fitness services to many office workers and have been hit hard by the lockdowns. Another site, in High Street Armadale, had fared better through the pandemic.

Mr Caldwell told The Age that he expected lockdowns or other forms of public health restrictions to keep people out of the CBD for the rest of the year, making trading conditions hard, if not impossible, and he had little hope of a significant recovery in 2021.

“The plan is to find a way that the entities are viable entities in six months time, so that we can participate in, hopefully, what’s going to be the uptick,” Mr Caldwell said.

“So we’ll batten down the hatches and do everything in our capability to make sure these businesses are alive in 2022.”

The lord mayor said the council was doing everything it could during the lockdowns to save jobs and businesses in the city.

“These are incredibly tough times and Melburnians are exhausted,” Cr Capp said.

“We know that city businesses are fighting to survive, and if they make it through these latest lockdowns, it could take them more than a year to recover.”

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