Auckland and Wellington retail real estate sectors remain under pressure amid weak consumer spending and ongoing economic uncertainty, according to a report from real estate company Colliers.
In Auckland’s CBD strip, retail vacancies rose to 11 per cent in June 2025, up from 10 per cent a year earlier.
While electronic card spending by Kiwis has shown signs of recovery, with five consecutive months of year-on-year growth, retailers still lack the confidence to open new stores. However, Colliers predicts the completion of the City Rail Link works is expected to support CBD spending and improve sentiment.
Despite the closures of DFS and Smith and Caughey’s, demand for space in the luxury and international brands precinct remains strong.
Large-format retail continues to perform well, while regional centre vacancies rose to 4.6 per cent.
Development activity has slowed, with retail building consents this year hitting their lowest level in more than 30 years, as of this July.
Larger-scale retail development projects include Westgate’s 18,000sqm Maki expansion and Ikea’s Mt Wellington store, slated to open on December 4.
Large-format retail sector drove rental growth of just under 3.5 per cent in the year to June, with outgoings stabilised by easing inflationary pressures, although high rates and rising insurance premiums continue to increase pressure on operating costs.
Wellington’s vacancy rates are less than Auckland’s
In Wellington, retail vacancy remained at 9.3 per cent in June, unchanged from last December, but up from 7.5 per cent a year earlier, due to weak consumer spending and ongoing government sector restructuring.
Vacancy varied across precincts, with Lambton Quay at 8.5 per cent, Cuba Street at 5.3 per cent, and Courtenay Place at the highest at 17.9 per cent.
Wellington City Council’s ‘Pops of Positive’ initiative will be launched to help activate vacant shopfronts, such as those on Manners Street, with art installations.
New supply is limited, with most space linked to refurbishments or mixed-use projects.
Primeproperty Group’s redevelopment of the Reading Cinema site into a cinema, retail, and hospitality destination by late 2027, and the Te Ngākau Civic Square and Johnsonville Mall redevelopments will provide new retail opportunities, says Colliers.
CBD gross face rents rose to $1251 per sqm in June from $1236 in March.
Regional and bulk retail rents remained steady at $1080 and just under $320 per sqm, respectively.
Although operating expenses have stabilised with the easing of inflationary pressures, rising local authority rates continue to increase occupancy costs.
