Australia’s CBD retail vacancy rate tightens to 10.4%

Return to office momentum along with increased tourism, events, infrastructure and international student inflows have boosted CBD foot traffic and demand for retail floor space, resulting in the national CBD retail vacancy rate tightening to 10.4% (weighted) in H2 2025.

CBRE’s Australian CBD Retail Vacancy H2 report shows the national CBD vacancy rate is at its lowest since the count began in 2021.

Looking at the capital cities surveyed, Sydney has the lowest vacancy at 4.3%, down from 5.0% in H1 2025 and Melbourne CBD has the second lowest vacancy at 6.5%. Brisbane saw a slight reduction of 0.77 pp to 17.5% while Adelaide had an increase of 2.40 pp to 11.7%.

Perth’s CBD retail vacancy tightened by 3.17 pp to 18.6%. While it’s still the highest rate in Australia, the figure is the lowest retail vacancy rate recorded for the city since H1 2021.

CBRE’s Head of Retail Research Kate Bailey said, “Overall, national CBD vacancy has tightened to the lowest level since we began this research series in H1 2021. This 10.4 % figure, down from 11.1% in H1 2025, is the result of a number of factors that we continue to see in the market including return to office momentum, coupled with increased tourism, events, infrastructure and international student inflows, has led to increased foot traffic in CBDs, supporting occupier appetite for floorspace.”

The report notes global and domestic brands continue to be attracted to Sydney’s core CBD flagship positions, with recent openings including Nespresso on Pitt Street and Cotti Coffee on Castlereagh Street.

In addition, two flagship Pop Mart stores opened on Pitt Street and the George Street frontage of World Square in H2 2025. The brand’s growth reflects strong engagement with younger demographics, particularly Gen Z and early-career Millennials, and product mixes aligned with discretionary spending, repeat visitation, and strong sales density in CBD catchments.

CBRE’s Head of NSW Retail Leasing David Swann said, “Finding suitable retail premises in the Sydney CBD is becoming increasingly challenging due to historically low vacancy rates. As vacancies decrease, rents are rising. Additionally, high construction costs are making it prohibitive to refurbish or build new premises unless the space is super prime and can command higher rents to balance the capital investment.

“Despite these challenges, demand for premises remains high, and we are working with a significant number of mandates. The market is experiencing a bifurcation: while luxury, international, and domestic flagship retailers can afford prime and super prime locations, other retailers are seeking relatively affordable premises in off-prime, non-main street locations,” Mr Swann added.

A total of 5,695 CBD retail outlets were surveyed for the report. Due to its large CBD retail core, Melbourne has the highest number of surveyed outlets at 1,726, followed by Sydney (1,503), Brisbane (1,360), Perth (684) and Adelaide (422).

Key insights from around the country:

Sydney

Sydney CBD retail vacancy tightened by 78 bp in the second half of 2025, with total vacancy now sitting at 4.3%. This is the fifth consecutive half year decline since H1 2023.

Arcade retail saw the largest fall, dropping 164 bp to 4.7%. The report notes improved occupancy across CBD arcades, including the Dymocks Building (12% vs 18% previously) highlights the appeal of curated heritage spaces where compact layouts and character allow retailers to stand out and capture concentrated foot traffic.

Shopping centre vacancy tightened by 20 bp to 3.4% underpinned by stable consumer spending, extended trading hours and longer dwell times, with premium retailers and emerging food and beverage operators sustaining occupancy.

Strip retail vacancy was down 86 bp to 5.4%.

Melbourne

Melbourne's CBD retail vacancy tightened by 40 bp in the second half of 2025 to 6.5%.

Strip vacancy declined to 7.1% (down 80 bp), reflecting a gradual improvement in occupancy as demand stabilises across high-visibility locations and Arcade vacancy rates dropped 30 bp to 9.6%.

In contrast, centre vacancy increased 10 bp to 4.5%. The report notes this increase signals a potential imbalance between tenant mix and shifting consumer preferences with many centres navigating a transition as high-end athletic footwear and performance sportswear brands increasingly replace traditional fashion retailers.

The report notes Melbourne’s CBD is undergoing a major retail uplift, with a wave of flagship stores and strategic upgrades bringing renewed energy to CBD retail.

These include the Melbourne Walk redevelopment (309-325 Bourke Street) and the repositioned 260 Collins Street that now offers a refined mix focused on health, wellness and fashion. Recent flagship openings including Lacoste unveiling a 190sqm concept store, a new multi-level Mecca emporium and JD Sports’ 1,600sqm two-level flagship space continue to lift CBD momentum.

Together, these projects reflect a broader shift toward asset enhancement as landlords compete for higher-quality tenants. With newly delivered stock still moving through leasing and fit-out stages, the CBD is in a transitional absorption phase. As openings progress, retailers are expected to adopt more proactive leasing strategies, potentially tightening vacancy toward a long-term average of 4.0%

CBRE’s Head of Retail Research Kate Bailey said,“Melbourne's CBD retail vacancy tightened by 40 bp over the six months to December 2025 (H2 2025), reaching an average of 6.5%. Melbourne’s CBD is undergoing a major retail uplift, led by the Melbourne Walk redevelopment (309-325 Bourke Street), which is strengthening demand and activating surrounding precincts. Several arcades have also completed upgrades in H2 2025, including the repositioned 260 Collins Street, now offering a refined mix focused on health, wellness and fashion. Recent flagship openings continue to lift CBD momentum and reflect a broader shift toward asset enhancement as landlords compete for higher‑quality tenants.”

Brisbane

Brisbane’s CBD retail vacancy decreased by 77 bp to 17.5% in the second half of 2025. This was the third consecutive half yearly decline since H2 2024.

Strip retail vacancy decreased 18 bp to 13.4%, arcade vacancy dropped 303 bp to 7.6%, and centre vacancy was down 163 bp to 27.3%.

The report noted Brisbane’s retail sector continued to benefit from the CBD’s strong growth in return to office numbers with Queensland’s permanent 50 cent public transport fares being a key driver of improved office attendance in the CBD. In addition, several new infrastructure and transport projects have enhanced accessibility, increasing CBD visitation and supporting retail activity.

CBRE’s Head of Retail Research Kate Bailey said, “Brisbane’s CBD retail vacancy continued to trend downward in H2 2025, decreasing by 77 bp to 17.5%. This represents the third consecutive half yearly decline since H2 2024. Brisbane’s retail sector has continued to benefit from the CBD’s strong growth in return to office numbers with Queensland’s permanent 50 cent public transport fares being a key driver of improved office attendance in the CBD. In addition, several new infrastructure and transport projects have enhanced accessibility, increasing CBD visitation and supporting retail activity.”

Perth

Perth’s CBD retail vacancy continued its downtrend, with a drop of 317 bp to 18.6% in H2 2025. This is the lowest CBD retail vacancy rate recorded since H1 2021, when this retail vacancy series began.

During H2 2025, improvement in retail vacancy was recorded across Perth CBD’s retail strips, centres and arcades. In the CBD retail strips overall vacancy decreased by 322 bp and now sits at 19.0%. Vacancy reductions were recorded across Murray Street, Hay Street Mall, King Street, Wesley Quarter and Barrack Street.

Within CBD centres, vacancy decreased slightly by 81 bp to 17.1%. This was primarily due to an improvement in vacancy at Enex, which has been redeveloped with a smaller but better occupied retail footprint on the ground floor.

Perth CBD’s retail arcades saw the biggest vacancy improvement, down 498 bp to 18.7%. This was driven by an improvement across the core and non-core retail arcades, including London Court, Piccadilly Arcade, Cloisters Arcade and Plaza Arcade.

The report notes the improving vacancy rate in Perth can be attributed to Western Australia’s robust economic performance leading to more favourable retail leasing market conditions. Favourable macro-economic conditions including a strong jobs market, wage growth and population growth are flowing through to consumer spending activity and supporting Perth’s retail market.

CBRE Senior Director & WA Head of Retail Fred Clohessy said, “The regeneration of the Perth CBD is starting to shine through. Though overall vacancy generally still sits at a relatively higher level there is continued and ongoing improvement. On a micro level, specifically the core strips which includes the Hay Street Mall, Murray Street Mall, William Street, and the luxury retail precinct west of the Murray Street Mall, recorded a vacancy rate of 11.9% during H2 2025, improving by 84 bp H-o-H.

“The key factors attributable to this general improvement include WA’s robust macro economic conditions, the ‘watershed moment’ opening of the ECU City Campus in February 2026, growth in the city’s student accommodation sector and growth in tourism numbers. The ECU City Campus has already had some impact on lowering vacancy levels which will be heightened once ECU City is fully operational. On the retailer front there is activity from luxury, activewear/lifestyle/leisurewear, food & beverage, beauty products/personal care sectors.”

Adelaide

Retail vacancy in the Adelaide CBD increased to 11.7% in H2 2025 (up from 9.3% in H1 2025), reflecting a softening in tenant demand and ongoing challenges within the discretionary sector. The uplift in vacancy was driven by a combination of store consolidations, limited new leasing activity and the persistence of weaker foot traffic across parts of the city centre.

Retail activity in the Adelaide CBD was bolstered by the arrival of several notable brands, including New Balance, which opened its first-ever South Australian store in Rundle Mall. The new flagship is also the largest New Balance store in Australia, highlighting strong retailer confidence in the precinct’s trading prospects. In November 2025, The Body Shop returned to the mall with a brand-new store further strengthening the CBD’s retail offering

Adelaide’s CBD core retail strip saw vacancy increase 80 bp to 4.6% and arcade vacancy increased 11.0 pp to 12.9%. Within the CBD centres vacancy increased 70 bp to 16.0%.

CBRE Director of Retail, Julia Pottenger said, “2025 was a record year for leasing on Rundle Mall with seven lease deals transacted by CBRE. New Balance opened their largest flagship in Australia, both Lovisa and Australia the Gift opened second stores on the mall with a number of tenants returning to the mall after some time such as Supre and Tarocash. This year we predict another strong year with stock becoming available in the mall, Rundle Street and within the prime centres.”