BRINGING BACK THE CBD

New Zealand’s central city retail and hospitality sectors have experienced a difficult two-year period, with higher operating costs, reduced office foot traffic, and weaker discretionary spending contributing to increased closures across Auckland and Wellington CBDs.

Auckland CBD strip retail vacancy rose from around 10.0% in 2024 to 11.0% in mid-2025. Market commentary from Colliers New Zealand highlights that hospitality and retail operators have been most affected in secondary CBD and fringe locations, where rising rents and staffing costs have weighed heavily. Several well-known hospitality venues have exited the market, particularly in high-cost precincts, while construction disruption and hybrid working patterns continued to reduce weekday foot traffic.

Despite this, there are early signs of stabilisation. Electronic card spending has shown periods of modest year-on-year growth through 2025, and leasing enquiry in prime retail locations has improved compared to 2023–2024 levels. Premium retail and hospitality precincts continue to attract demand, particularly from international and experiential brands, even as smaller independent operators remain under pressure.

New developments are near completion in the luxury sector based around the lower end of Queen Street, and connecting the Auckland CBD and its nearer suburbs, the long-awaited City Rail Link is in its final testing stages and remains on track for opening in the second half of the year - a transition that retailers will be hoping for sooner rather than later in the year. Auckland Transport are holding a webinar at 11am on 27 May to explore what improved connectivity will mean for city centre businesses and employers.

Resilience comes from (and despite) redevelopment

Wellington has experienced a sharper correction, particularly in hospitality. Colliers' Wellington Retail reports indicate rising vacancy in some CBD precincts, with Courtenay Place among the most impacted areas due to reduced government employment activity and lower weekday spending. Hospitality closures have been more pronounced in this market, reflecting tighter margins and reduced after-work trade.

However, Wellington’s prime retail strips such as Lambton Quay and parts of Cuba Street have remained comparatively resilient, supported by steady pedestrian activity and ongoing redevelopment projects aimed at repositioning the CBD toward mixed-use entertainment and hospitality.

Christchurch continues to be the standout performer among New Zealand’s main centres. According to CBRE New Zealand's Christchurch Property Market Overview, prime CBD retail demand has remained strong, with low vacancy rates and continued rental growth across key precincts such as Cashel Mall and High Street. Population growth, tourism recovery, and sustained inner-city redevelopment have underpinned this performance, setting Christchurch apart from Auckland and Wellington.

Overall, the national picture is shifting from rapid contraction toward early-stage stabilisation. While mid-market hospitality remains under pressure and selective closures continue, particularly in Wellington and parts of Auckland, leasing activity in prime locations is improving and consumer spending trends are beginning to level out.

For franchising's retail and hospitality operators, the current environment reflects a transition phase rather than a decline, with CBDs increasingly evolving into mixed-use destinations where hospitality, convenience retail, and experiential concepts are expected to play a larger role in the next growth cycle.