Downtown retail is back

For several years following the pandemic, downtown retail struggled. Empty storefronts, reduced foot traffic, and cautious retailers pulling back from CBD locations created a challenging environment for landlords and brokers alike. That period is clearly over.

Q1 2026 data confirms what we have been observing across our downtown retail mandates — foot traffic is up, vacancy is down, and retailers are committing to longer lease terms than at any point in the past four years. This guide breaks down what is driving the recovery and which parts of the downtown precinct represent the strongest opportunities for retail tenants.

The foot traffic story

The most compelling data point from Q1 2026 is a 34% year-on-year increase in pedestrian foot traffic across the main downtown retail corridor. This exceeds pre-pandemic levels for the first time and is being driven by a combination of factors including the return of office workers to CBD locations, increased tourism, and a significant uplift in residential density following several major apartment tower completions in 2025.

The busiest pedestrian intersections are now recording over 25,000 daily passes — a figure that makes downtown locations highly competitive with established suburban shopping centres for certain retail categories.

Which retail categories are winning

Not all retail categories are benefiting equally from the downtown recovery. The strongest performers are food and beverage operators, health and wellness businesses, and specialty retail with a strong experiential component.

Convenience retail — pharmacy, banking, dry cleaning — is also performing well as the daytime population increases. Fashion retail is recovering more slowly as consumers continue to split purchases between physical and online channels.

Lease terms are lengthening

One of the clearest signals of retailer confidence in downtown locations is the lengthening of average lease terms. In 2023 and 2024, most retailers were pushing for short initial terms with generous break clauses. Today we are seeing initial terms of 5–7 years being accepted without resistance from tenants who want to lock in current rates before rents increase further.

This shift in retailer psychology is significant. When tenants commit to long terms they are making a statement about their confidence in a location. Landlords are benefiting from this by reducing incentive packages and firming up rental expectations.

The best streets and precincts right now

Within the downtown precinct, the strongest demand is concentrated on the main retail spine between Commerce Street and Harbour Boulevard. Ground floor units on this corridor are leasing quickly — typically within 4–6 weeks of coming to market.

Secondary streets one block back from the main corridor represent the best value opportunity currently. Rents are 20–30% lower than on the primary strip but foot traffic is strong enough to support most retail categories. For F&B operators and service retail this represents an excellent entry point into the downtown market.

What this means for retailers considering downtown

If your business has been considering a downtown location, the window to secure space at current rental levels is narrowing. As vacancy tightens and foot traffic continues to improve, asking rents will increase and landlord flexibility will decrease.

The opportunity today is to secure a quality ground floor unit on or near the main retail corridor at rents that are still below their long-term equilibrium level. In 18 months this opportunity will likely no longer exist.