Retail vacancy rates in the City of Auckland CBD are showing signs of stabilising after two years of significant increases during the Covid-era, according to real estate company Colliers’ half-year Essentials report. 

Vacancies in the CBD have fallen for the first time since March 2020 to 13.8 per cent, compared with 14.4 per cent in December last year. 

The elevated vacancy rates had placed CBD strip retail rents under pressure – down from an average of $2620 in December to $2408 per sqm in June for prime spaces. 

Similarly, across the wider metropolitan region, retail vacancy rates are at 4.9 per cent, barely changed from June last year at 4.8 per cent. 

Vacancies are more common among strip sites, at 9.5 per cent, than within shopping centres where the rate remains low at 3.2 per cent. 

Colliers says that across the wider suburban markets, rents have held steady with average face rents at $680 per sqm, almost identical to June last year. Incentives remain at elevated levels.

“Rising interest rates have brought the yield-tightening cycle to an end. Yields softened over the first six months of the year across CBD and metropolitan markets albeit that transactional evidence was limited. Demand from investors for high-quality assets situated in strong catchments with positive growth factors remains evident.”

The company says that while surging inflation is a concern, support for the retail sector has been bolstered by the removal of all Covid-19 restrictions, reopened borders and consumer spending resilience.

Meanwhile, developments are ongoing with some 14,648sqm of retail space under construction and a further 38,987sqm having received building consent. Colliers says there is a particular focus on large-format retail offers. 

The biggest development underway is at Auckland International Airport where the Mānawa Bay premium outlet centre will offer 24,000sqm of retail space when it opens in late 2024. Similarly, New Zealand’s first Ikea store is scheduled to open in 2024 next to Sylvia Park, accompanied by a 6430sqm large-format retail centre under development by Kiwi Property Group.