A slowdown in spending has prompted Wellington's best-known retailer to consolidate under one roof.

Kirkcaldie & Stains managing director John Milford said the 149-year-old department store would give up about 500 square metres of space it uses in the Harbour City Centre and operate only from its main site next door.

Unusually, Kirks owns the Harbour City site, leasing all but a small portion to tenants, while it rents the space used by its department store.

Mr Milford said Kirks would vacate the Harbour City building once a tenant had been secured. "Given the current trading conditions it would probably be more sensible that we look to lease the space to a third party, which means the company improves its profitability."

In April, Kirks revealed that it was suspending dividend payments to shareholders as profits for the key Christmas period dropped sharply.

Last week the Westpac McDermott Miller regional economic survey showed confidence in the Wellington region fell to the lowest level since 1992.

Mr Milford said the consolidation would mean its least profitable product lines would be withdrawn. However, there was space in the main department store that could be used more efficiently.

The Harbour City building accounts for just under eight per cent of Kirks' 6500sqm of retail space.

Colliers International agent Ty Dallas, who is marketing the site, said its large size and plum position between Kirks and Country Road made the space highly desirable.

"Despite the challenging market there's been some most encouraging interest from national and Australian retailers, particularly fashion operators."

Mr Dallas said demand for space in Lambton Quay was always strong, with just over three per cent vacant, including the large site previously used by Whitcoulls.

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