Positive signs emerging for Wellington CBD retail market

Renewed interest in sites from international retailers, low vacancy in prime CBD retail property and good levels of leasing activity all point to a positive future for the Wellington CBD, according to CBRE.

Just 1.13% of ‘prime’ retail space in the CBD is vacant, illustrating the ongoing strong demand from retailers for well-located space, CBRE’s December 2024 vacancy survey shows.

Zoe Smith, Retail Leasing Specialist at CBRE, said enquiry levels from national and international retailers is steady, with a number of chains looking to either increase the size of their premises in Wellington or enter the market for the first time.

“We are working with several international retailers who are actively looking at Wellington as their next location to expand their store networks. Existing retailers have also been searching for larger space. These tenants are looking to position themselves for an expected improvement in consumer spending as interest rates reduce and confidence increases.”

Allen Street, off Courtenay Place, is also attracting renewed interest, she said. “Allen Street is starting to hum with retail space in the boutique Exchange co-working and retail development being leased to Backhouse Interiors, and O-Studio adding to the existing lineup of creative businesses, cafés and galleries.”

Jorge Chang Urrea, Research Manager at CBRE, said consumer confidence levels are starting to show some improvement, with light at the end of the tunnel.

“The market is showing high expectations of an economic rebound through lower interest rates and higher consumer confidence. The latest surveys of business and consumer sentiment indicate that falling interest rates are setting up the framework for a rebound in economic activity during 2025.”

Wellington’s overall retail vacancy rate (for all retail precincts) at December 2024 was 8.5%, up from 6.9% a year earlier. 

The overall vacancy rate is heavily influenced by the Courtenay precinct. However, the seeds have been sown for retail and hospitality regeneration in the area, said Smith.

“Recent high profile investment and leasing activity in the Courtenay precinct is a positive step forward and it’s exciting to have positive signals of growth and regeneration underway. Eventually this activity can be expected to contribute to greater lease uptake in the future for the precinct.”

Other activity in the Courtenay precinct includes a new restaurant & bar Lucky 8 opening in the former Establishment premises on Courtenay Place later this year.

Wellington’s overall vacancy rate also compares very favourably with Australian cities, said Chang Urrea.

“Wellington’s overall retail vacancy rate is very healthy on an Australasian comparison, where the retail market in some cities has been struggling with elevated vacancy and weak demand. For example, the 2024 CBD retail vacancy rate is 25% in Perth and 19% in Brisbane.”