Australian CBD retail vacancy rates showed a “lagged recovery” in the second half, and business confidence is running high, according to new CBRE data.

The realtor assessed 5347 retail outlets across Sydney, Melbourne, Brisbane, Perth and Adelaide and found that retail vacancy rates have tightened by 13.9 per cent.

CBRE’s Australian head of retail research, Kate Bailey, said that despite “heightened cost of living pressures”, there was a “healthy level” of discretionary spending during the second half.

“Retailers are on the expansion trail, with our latest Asia Pacific retail flash survey showing that 83 per cent of Australian respondents plan to grow their store networks this year, with 61 per cent planning to increase the quality of their store locations – a move which will favour CBD markets.”

Increasing inbound tourism, returning international students and higher office occupancies have also contributed to this outlook.

By city, Melbourne led the national CBD recovery with the city’s vacancy rate shrinking to 9.2 per cent followed by a dip in Adelaide to 13.3 per cent.

Sydney’s CBD vacancy rate increase was at 8.3 per cent driven by strip retail, particularly in the city’s Pitt Street which has extremely high rents.

“We’ve seen demand increase from national and international brands for prime locations on George and Pitt Streets off the back of strong sales and increasing office occupancy rates,” Leif Olson, CBRE’s Australian head of retail leasing.

• Further reading: CBD retail vacancies rise nationwide as customers turn to online