Australia’s CBD retail vacancy rate tightens to 11.1%

Australia’s retail sector continues to show resilience, despite persistent cost-of-living pressures, with a new CBRE survey showing the national CBD retail vacancy rate has tightened to 11.1% (weighted) in H1 2025. This is the lowest level since the count began in 2021.

CBRE’s Australian CBD Retail Vacancy H1 2025 report found Sydney had the lowest vacancy at 5.0%, down from 7.1% in H2 2024. The report notes this was in part due to construction at the MetCentre removing a number of previous vacancies from the count, however if a similar adjustment was applied to the previous period, H2 2024 vacancy would have been 6.1% (not 7.1%) which still shows significant movement.

Melbourne CBD has the second lowest vacancy, despite recording a slight increase of 89 bp to 6.9%. Adelaide also saw an increase of 1.69 bp to 9.3%.

Perth’s CBD retail vacancy tightened by 42 bp to 21.7%. While it’s still the highest rate in Australia, the figure is the lowest Perth CBD retail vacancy rate that has been recorded since H1 2021. Brisbane also saw a slight reduction of 22 bp to 18.3%.

CBRE’s Head of Retail Research Kate Bailey noted, “Overall, national CBD vacancy has tightened to the lowest level since we began this research series in H1 2021. This 11.1% figure, down from 11.3% in H2 2024, is the result of a number of factors that we continue to see in the market including return to office, coupled with increased tourism and international student inflows, has led to increased foot traffic in CBDs, supporting occupier appetite for floor space.”

A total of 5,614 CBD retail outlets were surveyed for the report. Due to its large CBD retail core, Melbourne had the highest number of surveyed outlets of any city at 1,676, followed by Sydney (1,529), Brisbane (1,363), Perth (681) and Adelaide (365). 

CBRE’s Director of Retail Tenant Rep, Pacific Sam Embling said, “Australia boasts a strong and resilient retail sector. Despite some uncertainties regarding global trade and ongoing cost-of-living challenges, consumer sentiment has improved over the past year. We anticipate steady growth in leasing for the remainder of the year, primarily driven by international retailers, especially new entrants, as there is a growing focus on our region.”

 

Sydney

Sydney CBD retail vacancy tightened by 210 bp in the first half of 2025, with total vacancy now sitting at 5.0%. This marks the fourth consecutive half year decline since H1 2023.

Shopping centre vacancy recorded the largest decline, tightening by 339 bp to 3.6% driven largely by changes at non-core centres. As mentioned above, the report notes this was in part due to construction at the MetCentre removing a number of previous vacancies from the count, however if a similar adjustment was applied to the previous period, H2 2024 vacancy would have been 6.1% (not 7.1%) which still shows significant movement.

Strip retail vacancy also declined, down 135 bp to 6.2%. Arcades improved slightly to 6.3% tightening by 59 bp.

CBRE’s Head of NSW Retail Leasing David Swann said, “The opening of the Metro has further lifted foot traffic in the CBD, particularly around Martin Place. Integration with adjacent office towers, retail and dining precincts has attracted a new wave of premium brands, experiential retailers and fast-growing specialty concepts such as Pop Mart, which are seeking locations that combine visibility, activation and strong pedestrian flows.”

Two flagship Pop Mart stores are scheduled to open in H2 2025, one on Pitt Street and another on the George Street side of World Square. The report notes Pop Mart’s rise in Australia has been driven by strong engagement among Gen Z and Millennial consumers, a collectible-focused model and a high-impact social media presence. Its success across Asia Pacific and within global urban precincts reinforces its growing local demand.

Melbourne

Melbourne's CBD retail vacancy increased by over the first half of 2025, climbing to 6.9% however, this is in line with the vacancy rate recorded in H1 2024 (6.9%).

The report notes construction activity around Bourke Street, including Metro Tunnel works, may have temporarily affected leasing activity and foot traffic. With completion anticipated in the second half of 2025, a subsequent reduction in vacancy rates is expected.

Arcade vacancy rates declined slightly, dipping 20 bp to 9.9%. This contraction may be attributed to increased foot traffic from tourism recovery. In contrast, strip retail vacancy rose to 7.9% (up 66 bp) while centre vacancy saw the most significant increase climbing 158 bp to 4.4%. This sharp increase may reflect evolving consumer preferences, notably a move towards high-end athletic shoe and sportswear brands replacing traditional fashion retailers, resulting in a recalibration of leasing strategies within centres and rearranging precincts to draw in wellness and lifestyle businesses.

Burgess Rawson from CBRE Victorian Leasing Director, John Brown said, “Melbourne’s CBD retail market is regaining momentum, driven by a noticeable uplift in tourism and weekday foot traffic. We’re seeing stronger enquiry for well-located flagship spaces, particularly from premium brands repositioning for long-term growth.”

Brisbane

Brisbane’s CBD retail vacancy strengthened in the first half of 2025, decreasing 22 bp to 18.3%.

Strip retail vacancy decreased 51 bp to 13.6% while arcade vacancy dropped 152 bp to 10.6%, however this figure is skewed by a small sample size. In contrast, retail centre vacancy increased 63 bp to 28.9%. This increase can be attributed to the flow of retailers moving out prior to the redevelopment of Wintergarden.

CBRE’s Head of Retail Research Kate Bailey noted, “Brisbane’s retail sector has benefited from the CBD’s strong return to office numbers, with average attendance sitting at 79%. In addition, several new infrastructure and transport projects, including the Kangaroo Point Bridge and the Brisbane Metro project have enhanced accessibility further increasing CBD visitation and supporting retail activity.”

Perth

Perth’s CBD retail vacancy experienced a slight improvement, decreasing by 42 bp during H1 2025 to 21.7%. This is the lowest CBD retail vacancy rate recorded since H1 2021, when this retail vacancy series began.

Vacancy improved across Perth’s CBD retail strips and centres while arcades saw an increase in the past six months. Retail strips saw a decrease of 40bp and now sits at 22.2% with improvements across the Hay Street Mall, Barrack Street and William Street. Centre vacancy decreased by 410 bp to 17.9%, this was due to an improvement in vacancy primarily at One40William and Enex. Retail arcades saw vacancy increase by 270 bp with overall vacancy now at 23.6%. The majority of the vacancy sits in Secondary locations which will improve due to the take up in retail space in super prime and prime locations in the Perth CBD.

CBRE Senior Director & WA Head of Retail Fred Clohessy said, “Perth’s CBD retail sector continues to build positive momentum with vibrant leasing conditions on the Murray Street Mall, where the Apple Store recently relocated to, and the luxury precinct west of the Murray Street Mall. Despite having the highest CBD retail vacancy in Australia, overall retail sales activity in Perth continues to outperform the majority of the Eastern States due to our population growth, low unemployment, strong domestic economic performance and the game changing ECU City campus opening in the first quarter of 2026.”

Adelaide

Retail vacancy in the Adelaide CBD rose to 9.3% in H1 2025 – the first increase since H1 2022.

Rundle Mall, Adelaide’s CBD core retail strip, continues to see improving conditions with vacancy decreasing to 3.8%, down from 4.3% recorded in H2 2024. Adelaide Arcade saw vacancy drop 190 bp to 1.9%, down from 3.8% in H2 2024. Within the CBD centres, which include Rundle Place and Myer Centre, vacancy increased 390 bp to 15.3%, up 11.3% in H2 2024.

CBRE Director of Retail, Julia Pottenger said, “Demand from Australian and International retailers for Rundle Mall remains strong with a number of new tenants opening in the coming months. We will also see a large number of tenants relocating due to downsizing or increasing their footprints in addition two fashions retailers returning from the mall after a number of years without a site.”