Australia’s CBD retail strips are showing real signs of life again, with empty shopfronts filling up as office workers return and foot traffic rebounds.

New data from CBRE Group shows the national CBD retail vacancy rate tightened to 10.4 per cent in the second half of 2025, the lowest level since the group began tracking the numbers in 2021.

The improvement is being driven by the return to office work, along with more tourists, international students and major events bringing people back into city centres.

“Overall, national CBD vacancy has tightened to the lowest level since we began this research series in H1 2021,” said CBRE Head of Retail Research Kate Bailey.

“This 10.4 per cent figure, down from 11.1 per cent in H1 2025, is the result of a number of factors that we continue to see in the market including return to office momentum, coupled with increased tourism, events, infrastructure and international student inflows, has led to increased foot traffic in CBDs, supporting occupier appetite for floorspace.”

A total of 5,695 retail outlets were surveyed across Sydney, Melbourne, Brisbane, Perth and Adelaide.

No vacancy?

Sydney continues to lead the country, with vacancy dropping to just 4.3 per cent — the lowest of any capital city and the fifth consecutive half-year decline since early 2023.

Global and local brands are still keen to secure flagship sites, with new openings including Nespresso on Pitt Street and Cotti Coffee on Castlereagh Street. Pop Mart also opened two flagship stores in the CBD during the second half of 2025.

With fewer empty shops available, finding a spot is getting harder and more expensive.

“Finding suitable retail premises in the Sydney CBD is becoming increasingly challenging due to historically low vacancy rates,” said CBRE’s Head of NSW Retail Leasing David Swann.

“As vacancies decrease, rents are rising. Additionally, high construction costs are making it prohibitive to refurbish or build new premises unless the space is super prime and can command higher rents to balance the capital investment.”

Swann said the market is increasingly split between premium retailers and smaller operators.

“The market is experiencing a bifurcation: while luxury, international, and domestic flagship retailers can afford prime and super prime locations, other retailers are seeking relatively affordable premises in off-prime, non-main street locations,” he said.

Melbourne gaining momentum

Melbourne’s CBD vacancy rate also tightened, dropping to 6.5 per cent as new flagship stores and major redevelopments helped revitalise the city centre.

Strip retail vacancy fell to 7.1 per cent, while arcade vacancies also improved.

Bailey said major projects are helping drive demand.

“Melbourne’s CBD is undergoing a major retail uplift, led by the Melbourne Walk redevelopment (309-325 Bourke Street), which is strengthening demand and activating surrounding precincts,” she said.

“Recent flagship openings continue to lift CBD momentum and reflect a broader shift toward asset enhancement as landlords compete for higher-quality tenants.”

However, shopping centre vacancies edged slightly higher, suggesting some landlords are still adjusting their tenant mix to match changing consumer tastes.

Brisbane boosted by cheaper transport

Brisbane’s CBD vacancy rate fell to 17.5 per cent, marking the third consecutive decline.

CBRE says the improvement has been helped by strong office attendance and infrastructure upgrades — including cheaper public transport.

“Brisbane’s retail sector has continued to benefit from the CBD’s strong growth in return to office numbers with Queensland’s permanent 50 cent public transport fares being a key driver of improved office attendance in the CBD,” Bailey said.

“In addition, several new infrastructure and transport projects have enhanced accessibility, increasing CBD visitation and supporting retail activity.”

Perth heading in the right direction

Perth still has the highest vacancy rate at 18.6 per cent, but it’s improving fast and is now at its lowest level since 2021.

CBRE Senior Director Fred Clohessy said the city is benefiting from strong economic conditions and population growth.

“The regeneration of the Perth CBD is starting to shine through,” he said.

“Though overall vacancy generally still sits at a relatively higher level there is continued and ongoing improvement.”

He said major projects — including the ECU City Campus opening — are expected to bring even more activity into the city.

Adelaide fails to pickup

Adelaide was the only city to record an increase in vacancy, rising to 11.7 per cent amid weaker demand from discretionary retailers.

The increase was linked to store closures, limited new leasing and softer foot traffic in some parts of the CBD.

Despite this, CBRE Director of Retail Julia Pottenger said leasing activity remains strong in key precincts.

“2025 was a record year for leasing on Rundle Mall with seven lease deals transacted by CBRE,” she said.

“This year we predict another strong year with stock becoming available in the mall, Rundle Street and within the prime centres.”

The data paints a mixed picture for small business retailers. On the one hand, an increase in foot traffic is good news for retailers already in CBD locations. But tighter vacancy rates and rising rents could make it harder for new operators to secure prime spots.

CBRE says the result is a two-speed CBD retail market with premium brands dominating the main strips, while smaller businesses look for opportunities in arcades, side streets and secondary locations.

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