Hamilton’s central business district is navigating a complex economic landscape, where ongoing business struggles and declining foot traffic clash with a wave of major development projects fuelling long-term optimism.
According to the Hamilton Central Business Association's (HCBA) latest economic snapshot, total CBD spending reached $803.2 million in 2025. However, HCBA general manager Vanessa Williams says the reality on the ground remains difficult for many. “I can’t sugarcoat it, it’s tough for businesses out there,” Williams says. She notes that a hoped-for upswing in 2025 did not materialise, and businesses are now anxiously looking towards 2026.
The core challenges stem from a slow recovery in pedestrian numbers following the COVID-19 pandemic and the persistent impact of work-from-home arrangements. “We’re still trying to rebuild the pedestrian numbers post-COVID,” Williams says. “We’re still trying to moderate the effect of working from home.” Average pedestrian counts in the CBD were down across all months in the latter half of 2025 compared to previous years, according to data from Hamilton City Council.
A challenging environment for retailers
This challenging environment is having real-world consequences for local businesses. The recent closure of Frankton’s Agora Café after 17 years serves as a stark example of the current pressures. Manager Rachel Barlow says the last few months have been particularly tough. “There are some days where we're lucky if we even make $300, which doesn't even cover staff. That doesn't cover anything,” she says.
Barlow points to the rising cost of living as a primary factor, forcing households to cut back on discretionary spending. “The cost of living at the moment is really difficult. So naturally coffee is the first thing to go,” she says. The café saw its staff numbers shrink from five to two since October last year, relying on volunteers to fill the gaps. The situation at Agora reflects a wider economic trend across the country. Similar economic pressures are being felt by businesses in Lower Hutt, where local businesses have closed due to a significant revenue drop caused by roadworks. The tough conditions for businesses across the country were underscored by recent Stats NZ figures showing New Zealand's gross domestic product (GDP) fell by 0.9% in the June quarter. The decline was driven by downturns in key sectors, including a 3.5% drop in manufacturing and a 1.8% fall in construction, painting a sober picture for the national economy.
A tale of two vacancies
While the overall mood is cautious, the HCBA’s report reveals a more nuanced story within the property market. The central city’s retail vacancy rate saw a slight improvement, dropping to 10.4% in the second half of 2025. Conversely, office vacancy rose from 6.4% to 8.9% during the same period.
However, Williams explains this increase isn't a simple story of decline. There is strong demand for refurbished and new-build office spaces as companies seek to create more appealing work environments to entice employees back to the city. She says businesses are actively moving away from the outdated “cubicle farm-style” offices of the past.
This trend is about creating spaces where employees genuinely want to be, which in turn helps drive foot traffic and vibrancy back into the heart of the city. The investment in high-quality office stock is seen as a crucial component of the CBD's long-term revitalisation strategy.
'Big ticket' developments spark confidence
Fuelling this cautious optimism is a significant pipeline of investment. “The big ticket developments underway show confidence to keep investing in the central city,” Williams says. These projects are seen as critical for broadening the visitor economy, growing the nighttime economy, and lifting confidence for surrounding businesses.
A major highlight was the recent opening of the Hamilton Hotel within the new BNZ Theatre building, which instantly added five new hospitality offerings and a major event space to the city’s portfolio. The theatre itself, which opened in January, is a cornerstone of the city's new arts and culture precinct.
Other major projects reshaping the city's skyline and streetscape include the ongoing construction of the five-star Pullman hotel, the development of Building B at the Union Square complex, and a new Fonterra building. The list of works also includes the facade upgrade of the central library, repairs to the Celebrating Age Centre, and the transformation of the former Ferrybank Reception Centre into a new bar and restaurant on the riverfront.
These larger projects are complemented by a range of other investments, including a new 42-apartment block, office redevelopments, and two new medical facilities, all signalling a multi-faceted belief in the future of the central city.
The path forward
Despite the confidence shown by developers, Williams stresses that buildings alone are not enough. The ultimate success of the CBD hinges on attracting people to use and enjoy these new and existing spaces. She also notes that encouraging more inner-city living, catering to a range of residents from students to those seeking river view penthouses, would provide a much-needed boost to local businesses like the many new hospitality venues and even community hubs like the Rocky Hill sports bar.
We need the numbers in town. To have the offerings, experiences, the services also requires the people to be coming along and enjoying them.
To help improve the street-level experience, the HCBA has welcomed Hamilton City Council’s agreement to trial a city-centre “guardian” tasked with sprucing up the area and addressing maintenance issues. Williams backs the initiative as a practical step towards enhancing the city's appeal. “Being out on the ground on a daily basis, seeing where improvement could be made. just taking care of our back yard, I absolutely welcome it,” she says.
Ultimately, the hope is that the combination of major new attractions and a renewed focus on the public realm will reverse the decline in foot traffic and create a vibrant, sustainable future for Hamilton's city centre.
