In 2020, the COVID-19 pandemic and related economic downturn impacted economies globally. However, in South Australia (SA), the downturn has not been as deep as initially feared, and the recovery phase is already ahead of expectations. Economic activity in SA has already rebounded. SA’s annual export growth by value is the strongest in Australia (14.6% year-to-April 2021). And the labour market is buoyant, with May 2021 total employment higher than March 2020 pre-COVID-19 levels. So, the recovery is in full swing, and things are quickly returning to somewhat pre-pandemic normal. But not in Adelaide’s retail high streets.

Over the early COVID-19 period, the fortunes of the retail strips followed the geography of daily expenditure. With almost no white-collar worker coming to the city daily during that period, spending was re-allocated to neighbourhood retail areas, where these workers spent most of their time.

In 3Q20, JLL Research analysed seven major retail high streets across the Adelaide CBD. We found that vacancy along the two major CBD retail high streets (Rundle Street and Hindley Street) increased significantly, moving from 7.7% in the previous analysis in 2Q19 to 13.1%. Conversely, over the same period, vacancy along the major suburban retail high streets of O’Connell Street (North Adelaide), The Parade (Norwood), King William Road (Hyde Park & Goodwood), Jetty Road (Glenelg), and Prospect Road (Prospect) decreased from 10.4% to 9.3%.

With the SA Government successfully containing the virus, the rate of white-collar workers returning to the CBD trended upwards from July 2020 onwards. The percentage of Adelaide CBD workers returning to the office has been the strongest across Australia’s capital city CBDs since January 2021 and currently sits at 78% (May 2021). However, so far in 2021, retailers’ fortunes are yet to follow the geography of daily expenditure back into the city.

In fact, in our 1Q21 analysis, retailers’ demand for space in Adelaide’s suburban high street retail strips had increased further. Over the last six months to 1Q21, the blended vacancy rate across the tracked suburban high street retail strips has decreased by two percentage points (pps) to 7.3% – the lowest since early 2016. On the other hand, the vacancy rate on the two major CBD retail high streets remained broadly unchanged, decreasing marginally by 0.2 pps to 12.9%.

We expect that the retail high streets in the CBD will recover eventually, but not at the expense of suburban retail high streets. COVID-19 kept us all at home for an extended period of time across Australia in 2020, with some states harder hit than others. Maybe the pandemic is the catalyst for a stronger connection to your neighbourhood, your local restaurants and cafés, and the realisation that you don’t need to travel far to find what you need.

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