Sydney's CBD retail tightens to the lowest vacancy in the country as luxury cements its dominance

Sydney's CBD retail core has recorded a vacancy rate of 3.7 per cent in 2026, down sharply from 6.7 per cent in 2025 and 5.3 per cent in 2024, now the tightest of any capital city in this survey. The improvement stands in contrast to the office market, where vacancy sits at 13.3 per cent, only marginally improved from 13.7 per cent in 2025 and still well above the 11.6 per cent recorded in 2024. As with several other capitals, Sydney's retail core is proving considerably more resilient than its office market, with the CBD's fashion and luxury retail draw increasingly doing the work that office attendance alone can no longer be relied on to do. Despite the ongoing elevated office vacancy, a reduction in work from home has kept city activity more robust, confirmed by steady increases in public transport activity into the CBD, this has encouraged retailers, notably food, to return.

The tenant mix confirms Sydney's position as the nation's premier fashion and luxury retail destination. Clothing and soft goods remains the largest category at 32.1 per cent of tenancies, rebounding from 31.1 per cent in 2025. Other personal and household goods retailing, largely jewellery, has grown steadily to 26.5 per cent from 22.3 per cent in 2024, now firmly the second largest category in the core. Taken together, fashion and personal goods retailing now account for close to 60 per cent of all Sydney CBD tenancies. Cafés and restaurants have also expanded, up to 13.0 per cent from 10.7 per cent in 2024 as weekday vibrancy returns to the CBD. Services have eased to 14.4 per cent from 16.5 per cent, continuing the broader national pattern of retail and hospitality displacing lower footfall service tenants.

Luxury specifically continues to build share within that mix, with luxury tenancies now representing 32.1 per cent of all CBD tenancies, up from 26.2 per cent in 2024. That growth is heavily concentrated on Castlereagh Street, long regarded as Sydney's premier luxury strip, and on King Street, both showing a considerably higher luxury share than the CBD average.