Belconnen Community Council chair Glen Hyde said it was great news for Belconnen.

The retail chain announced in September 2017 plans to close the store, indicating it was likely to happen in mid 2019.

"Fortunately somebody at Myer has seen the light of day," Mr Hyde said.

Mr Hyde said Belconnen retailers and families had been struggling in the last five to six years.

"We all know that the local economy is down by eight to 15 per cent," he said.

"I think that's mainly due to the public service not having a big a pay rise."

Canberra Business Chamber chief executive Dr Michael Schaper said the loss of Myer would have had an effect on other business in the shopping centre.

"When big stores go we lose a couple of things. It's a bit like an ecosystem," Dr Schaper said.

He said bigger stores like Myer attracted shoppers would would then go on to shop elsewhere.

"Hopefully this will be seen as a vote of confidence," he said.

Canberra had the biggest retail spend per capita annually, Dr Schaper said.

In a joint statement, Myer and Westfield Belconnen's owner Scentre Group said the companies had come to a new lease agreement.

This agreement was commercial in confidence, a Myer spokesman said.

The spokesman said a mix of 65 full-time and part-time jobs would remain.

The companies said refurbishment works would be undertaken across a reduced floor space, downsizing the Myer from three floors to two across at 12,000sqm store "with an improved retail experience and an increased number of new and exclusive brands".

Dr Schaper said reduction in size was always an issue but it was a relief the company had decided to stay.

The announcement of the closure of the store, which has been there since 1978, came as a blow to the Belconnen community. It is regarded as an anchor tenant in the complex.

Belconnen Community Council's Mr Hyde said he hope to see more government investment in the Belconnen area, pointing to the Belconnen Markets where retailers there are expecting huge losses during a redevelopment of the precinct.

"I would hope that there would be some way that they could expand their offering in the mall," Mr Hyde said.

He said Belconnen needed a commitment from the government on infrastructure and the local public service workforce to help local businesses.

"We don't have a lot of local shops that are viable anymore," he said.

The business chamber's Dr Schaper didn't believe wage stagnation in the public service was to blame for the downturn in Canberra economy, which he said wasn't as dependent on public service dollars anymore.

Both the federal and ACT public service sector made up a third of employment in the capital, according to Dr Schaper.

"Once upon a time it would have been the be all and end all," he said.

Mr King said the decision to keep the store open was an example Myer was working with landlords to reduce space and improve its stores.

Scentre's Mr Allen said it was a "great outcome for our customers at Westfield Belconnen".

Myer closed its Tuggeranong store in 2012 and abandoned its plans to open a store in Woden in 2014.