Melbourne construction stalled by month-long lockdown, but Sydney a lingering issue

Melbourne  Lockdown CBD

Melbourne’s lockdown extension is having broad effects. Picture: Ian Currie

Tough new restrictions on Melbourne’s construction industry will cost the state millions in lost economic benefit and sideline thousands of tradies.

But commercial property agents have revealed while the city will be able to bounce back, Sydney’s ongoing Covid-19 woes could have a more lasting impact.

For the first time since a pilot light phase was implemented for Melbourne’s construction sector during Victoria’s tough second-wave lockdown last year, most of the city’s tradies and builders have downed tools after Premier Daniel Andrews instated a 25 per cent cap on workers at major building sites.

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Master Builders Victoria responded to the change with “extreme disappointment”, noting the sector had recorded only six Covid-19 cases this year.

The group’s chief executive Rebecca Casson said one of its members had already calculated the coming two weeks would cost their business about $2.4m and result in tradies being laid off.

Ms Casson said the industry was “being unfairly punished following some disappointing public behaviour”.


Construction activity will be cut back significantly for two weeks. Picture: Andrew Henshaw

Urban Development Institute of Australia Victorian chief executive Matthew Kandelaars hoped the announcement would quickly be “matched by a pathway to return the industry to full strength as soon as possible”.

“The urban development industry is critical to keeping Victoria’s economic engine running,” Mr Kandelaars said.

CBRE Melbourne middle markets director Scott Orchard said while the extension of the second lockdown had killed off “green shoots” emerging across Melbourne, it would likely only temporarily delay a recovery.

Cops Forming in the City

Police on the streets of Melbourne as the city’s curfew was introduced. Picture: David Geraghty

Ongoing Covid-19 issues in Sydney could have bigger impacts on the market.

“Where you have a campaign with a national or international audience, you need to consider how you move forward, as you need to be able to have people move from interstate at least,” Mr Orchard said.

“If you were relying on a Sydney buyer or they would make up a reasonable percentage of the buyer pool, you may want to delay already. And there probably would be sales that have had to be postponed at this point.”

He noted there were concerns for the hospitality and retail markets, but that industrial property continued to “go gangbusters” buoyed by a rise in demand for warehouse space off the back of increased online shopping.

Confident computer programmer developer standing in IT office crossing hands on chest, working on a project in software development company or startup. High quality image.

IT firms and the government are driving much of Melbourne’s leasing activity at the moment.

CBRE head of office leasing Ashley Buller said the extension might delay some leases being signed for offices, but demand remained high thanks to government and IT firm movements and vaccination providing a “light at the end of the tunnel”.

“But what it might do is that tenants normally have a long lead time before they make a decision on a new lease, and they will now just be getting closer and closer to their current lease expiry … and some might have to sign a deal without inspecting the property,” Mr Buller said.

Property Council of Australia data also shows commercial landlords were offering significant incentives including more cash to refit a space for their tenants’ needs and even reduced lease term commitments to encourage deals.

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