The national CBD retail vacancy rate has tightened by 20 basis points to 11.1 per cent in the first half of 2025, the lowest level since the property firm CBRE began measuring this in 2021.
The firm’s Australian CBD Retail Vacancy H1 report found Sydney had the lowest vacancy at 5 per cent, down from 7.1 per cent in the second half of 2024. This significant fall was partially due to construction at the MetCentre, removing a number of previous vacancies from the count. However, the report noted that if a similar adjustment was applied to the previous period, the H2 2024 vacancy rate in Sydney would have been 6.1 per cent, which still shows significant movement.
Melbourne CBD has the second lowest vacancy, despite recording a slight increase of 89 bp to 6.9 per cent. Adelaide also saw an increase of 1.69 bp to 9.3 per cent.
Perth’s CBD retail vacancy tightened slightly by 42 bp to 21.7 per cent. While it’s still the highest rate in Australia, CBRE noted it is the lowest Perth CBD retail vacancy rate that has been recorded since 2021. Brisbane also saw a slight reduction of 22 bp to 18.3 per cent.
CBRE’s head of retail research, Kate Bailey, said the national fall in vacancies comes amid an ongoing return to office alongside increased tourism and international student inflows.
A total of 5,614 CBD retail outlets were surveyed for the report. Due to its large CBD retail core, Melbourne had the highest number of surveyed outlets of any city at 1,676, followed by Sydney (1,529), Brisbane (1,363), Perth (681) and Adelaide (365).
“Australia boasts a strong and resilient retail sector,” the property firm’s director of retail tenant rep in the Pacific, Sam Embling, said.
“Despite some uncertainties regarding global trade and ongoing cost-of-living challenges, consumer sentiment has improved over the past year. We anticipate steady growth in leasing for the remainder of the year, primarily driven by international retailers, especially new entrants, as there is a growing focus on our region.”
The vacancy decline in Sydney CBD marks the fourth consecutive half-year fall since the first half of 2023.
Shopping centre vacancy recorded the largest decline, tightening by 339 bp to 3.6 per cent driven largely by changes at non-core centres. Strip retail vacancy also declined, down 135 bp to 6.2 per cent. Arcades improved slightly to 6.3 per cent tightening by 59 bp.
“The opening of the Metro has further lifted foot traffic in the CBD, particularly around Martin Place,” CBRE head of NSW retail leasing David Swann said. “Integration with adjacent office towers, retail and dining precincts has attracted a new wave of premium brands, experiential retailers and fast-growing specialty concepts such as Pop Mart, which are seeking locations that combine visibility, activation and strong pedestrian flows.”
Two flagship Pop Mart stores are scheduled to open in H2 2025, one on Pitt Street and another on the George Street side of World Square. The report notes Pop Mart’s rise in Australia has been driven by strong engagement among Gen Z and Millennial consumers, a collectible-focused model and a high-impact social media presence.
Melbourne’s slight rise in vacancies may likely have been caused by construction activity around Bourke Street, including Metro Tunnel works, affecting leasing activity and foot traffic. With completion anticipated in the second half of 2025, a subsequent reduction in vacancy rates is expected.
Arcade vacancy rates in Melbourne declined slightly, dipping 20 bp to 9.9 per cent. This contraction may be attributed to increased foot traffic from tourism recovery.
Strip retail vacancy rose to 7.9 per cent (up 66 bp) while centre vacancy saw the most significant increase, climbing 158 bp to 4.4 per cent. According to CBRE, this sharp increase may reflect evolving consumer preferences, notably a move towards high-end athletic shoe and sportswear brands replacing traditional fashion retailers, resulting in a recalibration of leasing strategies within centres and rearranging precincts to draw in wellness and lifestyle businesses.
Within the half, JD Sports and Mecca fitted out their respective flagship stores in Melbourne CBD.
Amid the decrease in Brisbane’s CBD vacancy rate, strip retail vacancy decreased 51 bp to 13.6 per cent while arcade vacancy dropped 152 bp to 10.6 per cent. CBRE noted this figure is skewed by a small sample size.
In contrast, retail centre vacancy increased 63 bp to 28.9 per cent. This increase can be attributed to the flow of retailers moving out before the redevelopment of Wintergarden.
Head of retail research Kate Bailey noted that Brisbane’s retail sector is benefitting from the CBD’s strong return to office numbers, with average attendance sitting at 79 per cent.
In Perth, vacancy improved across the CBD’s retail strips and centres while arcades saw an increase in the past six months. Retail strips saw a decrease of 40bp and now sit at 22.2 per cent with improvements across the Hay Street Mall, Barrack Street and William Street.
Centre vacancy decreased by 410 bp to 17.9 per cent, this was due to an improvement in vacancy primarily at One40William and Enex.
Retail arcades saw vacancy increase by 270 bp, with overall vacancy now at 23.6 per cent.
“Despite having the highest CBD retail vacancy in Australia, overall retail sales activity in Perth continues to outperform the majority of the Eastern States due to our population growth, low unemployment, strong domestic economic performance and the game-changing ECU City campus opening in the first quarter of 2026,” CBRE senior director and WA head of retail Fred Clohessy said.
As for Adelaide, its retail vacancy lift in H1 2025 was the first rise since the first half of 2022.
The lift was driven by Rundle Mall, with a vacancy rate of 3.8 per cent. Adelaide Arcade saw vacancy drop 190 bp to 1.9 per cent, down from 3.8 per cent in H2 2024.
Within the CBD centres, which include Rundle Place and Myer Centre, vacancy increased 390 bp to 15.3 per cent, up 11.3 per cent in H2 2024.
“Demand from Australian and International retailers for Rundle Mall remains strong, with a number of new tenants opening in the coming months,” CBRE director of retail Julia Pottenger said.
“We will also see a large number of tenants relocating due to downsizing or increasing their footprints, in addition to two fashion retailers returning from the mall after a number of years without a site.”