New Zealand retail market update 2026

Leasing market

Consumers remain cautious

Leasing demand is gradually improving as economic indicators stabilise. Lower mortgage rates are easing household pressure compared with a year ago, supporting more stable consumer spending and improving business confidence. Discretionary spending remains limited by subdued population growth, flat wages and higher living costs.

Leasing performance is mixed

Large format retail remains tight across most regions. CBD and town centre vacancy rates are higher, reflecting the continued impact of hybrid working. Leasing timeframes for smaller tenancies vary depending on location and landlord rental expectations.

Growth in the corridors

Retail performance remains uneven nationwide, with the South Island generally outperforming the North, supported by internal migration and more affordable housing. Retail supply continues to expand in growth areas such as Westgate, Drury and Christchurch. International retailers are progressing expansion plans in key locations.

 

Investment market

Investment demand regaining momentum

Investment conditions are shifting from weak to neutral as buyer enquiry and competition improve for well-priced assets. Syndicators and private capital are becoming more active, supported by easing funding costs and favourable income returns. Purchasers remain selective, focusing on core and value-add assets.

Yields stabilising

Yield conditions are neutral, with signs of stabilisation following recent volatility. Higher transaction volumes are providing clearer pricing evidence and helping narrow price gaps between buyers and vendors.

Development outlook is improving selectively

Development conditions remain neutral, with feasibility improving as construction cost pressures ease. Leasing pre-commitments remain critical, with well-located projects progressing alongside anchor tenants. Some tenants are finding it difficult to justify higher rents required for new builds.