Australia’s CBD retail markets are bouncing back, with most capital cities seeing a notable decline in vacancy rates as foot traffic improves and confidence returns to the sector. However, Sydney, typically the country’s strongest retail performer, has become the outlier, with vacancy rates rising over the past 12 months.

New research from Ray White shows that four of Australia’s six major capital cities have recorded substantial improvements in their CBD retail vacancy rates over the past year. Adelaide leads the national recovery, with retail vacancies falling from 10.9 per cent in 2024 to 9.6 per cent in 2025.

Perth has also performed strongly, with vacancy dropping from 14 per cent to 11.6 per cent, while Brisbane has continued its positive trajectory, improving from 13.0 per cent to 10.9 per cent.

Melbourne, which faced some of the most prolonged disruptions during COVID-19, has shown signs of stabilisation, with retail vacancies easing from 10 per cent to 8.8 per cent. These improvements reflect a broader return to CBDs, driven by rising office occupancy, renewed consumer confidence, and the growth of experiential retail formats designed to attract foot traffic.

In contrast to the national trend, Sydney has seen CBD retail vacancies rise from 5.4 per cent in 2024 to 6.7 per cent in 2025. Ray White puts this shift down to new retail spaces entering the market and an uptick in tenant churn, suggesting that competitive pressures remain high in the Harbour City.

Despite this, Sydney continues to dominate as the nation’s fashion capital. Fashion and soft goods account for 31.1 per cent of CBD tenancies, while personal goods, particularly jewellery and luxury retail, represent another 25.8 per cent.

These proportions indicate a sophisticated retail landscape, yet also highlight a sector more exposed to changing economic conditions and shifting consumer preferences. The report also reveals a divide in the retail character of Australia’s CBDs. Sydney and Perth remain fashion-forward markets, while cities like Canberra, Melbourne and Brisbane are leaning heavily into food and beverage offerings to maintain foot traffic.

In Canberra, for example, food retailing accounts for 38.4 per cent of tenancies, the highest in the country, with Melbourne at 28.2 per cent and Brisbane at 25.7 per cent. By comparison, Sydney and Perth show lower food retail representation at just 14.4 per cent and 18.5 per cent respectively. This suggests that some cities are prioritising hospitality and experiential offerings to activate their CBDs in the face of reduced office worker presence. Pop-up venues, bars, and casual dining have become vital in attracting both locals and tourists back into city centres.

Experiential retail is also reshaping the CBD landscape. Social media-driven concepts such as PopMart, known for collectible toys and long queues, are drawing new demographics into physical stores in both Sydney and Melbourne. The emphasis on in-store experiences, TikTok-worthy moments, and community activations reflects a broader shift in retail strategy.

The link between office occupancy and retail performance also remains strong. Cities with stable or improving office market conditions, like Adelaide and Brisbane, are also seeing retail rebound. Melbourne, still grappling with a high office vacancy rate of 17.9 per cent, continues to feel pressure in its retail sector, though signs of stabilisation are emerging.

Tourism is another major tailwind. Hotel occupancy has rebounded in all major cities, providing crucial foot traffic on weekends and evenings to supplement weekday trade from office workers. As international visitor numbers rise, CBD retail stands to benefit further.