Wellington city’s CBD vacancy rate dropped to 5.4 per cent in December last year with short-term downward pressure on rentals expected to continue. 

According to Colliers Essentials’ first-half Wellington Retail report, CBD vacancies across all major cities have declined to 6.5 per cent in December from 8.5 per cent in June.

Throughout the year, rental yields softened and currently range between 5.8 per cent and 7.4 per cent for prime-grade CBD assets. The average gross face rent is $1253 per sqm.

In a sign of relief for Wellington, overseas brands including Tommy Hilfiger and Calvin Klein have confirmed their renewed interest in occupying spaces within the former David Jones department store on Lambton Quay, which closed last year.

“A further softening in yields is likely over the short term but a stabilisation can be expected later in the year as interest rates reach their cyclical peak,” said the report.

Although investment activity slowed over the latter half of the year, the report noted that purchaser interest continues to remain strong for prime-grade assets especially those in strong catchments.