Strip retail vacancy in Auckland’s CBD decreased to 9.9 per cent at the end of last year from 10.4 per cent a year earlier, according to a report from Colliers.

The decline was driven by strong demand for premises within the luxury and international brands precinct.

Vacancy rates remained largely unchanged elsewhere in the CBD, with the large format retail sector continuing to experience high levels of tenant demand.

While rental rates remained static across most CBD precincts, new benchmark rents were recorded within the luxury brands precinct at the northern end of Queen Street.

The large-format retail sector continued to experience rental growth, with average face rents increasing about 3.3 per cent in the year to March.

Development activity remains subdued, with building consents issued for approximately 25,500sqm of new retail space in the year ended March – the lowest figure for a March year this century.

However, several significant projects are currently under development, including Ikea’s first New Zealand store and Westgate’s Maki Centre.

The report noted that prospects of retail sector are improving, with retail spending showing signs of recovery as declining interest rates ease pressure on household budgets.