David Jones exit drives up Wellington CBD retail vacancy rate

(Source: Imagexphoto from Envato)

Wellington City’s CBD retail vacancy rate has increased, largely due to the closure of the David Jones department store. 

According to Colliers Essentials’ second-half year Wellington Retail report, the vacancy rate rose to 8.7 per cent in June, from 5.6 per cent just six months earlier. 

But Colliers says the spike is likely to be short-lived given a reconfiguration of the space left empty by the Australian chain has drawn high levels of tenant inquiry. Tenants new to the city are among those set to sign leases in the building, Colliers hinted.

While the vacancy rate has risen artificially high, CBD rents stabilised during the first six months of the year, with average gross prime rents at $1253 per square metre. 

“Incentives, however, remain in play although these are assessed on a case-by-case basis and are heavily influenced by location,” said the report. “Operating costs are on the rise due to the inflationary environment increasing costs to occupiers. Rentals within regional centres have remained little changed over the first half of the year.”

Colliers concludes that while high inflation is putting pressure on discretionary spending, a resilient economy, the removal of Covid-19-related trading restrictions and the return of international tourists and students will stimulate the retail economy. 

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