Property Council Wellington branch president Mile Cole said the capital had lost a much-needed opportunity for a "single voice".
A super city would have reduced inefficiencies, improved governance and moved the region forward, he said. "At the moment too many councils are pulling in different directions, leaving Wellington with a distinct lag in competitiveness among New Zealand cities."
Wellington Employers' Chamber of Commerce chief executive John Milford said businesses were disappointed but there was still a "huge appetite" for change.
"Wellington region is not doing as well as we should be, or as well as we could be. Change to our local government arrangements is a factor that would help to move the region forward."
Mayors in the region, including Wellington's Celia Wade-Brown, said the idea was always too ambitious and a more pragmatic solution would be found.
"Today's decision shows that for the vast majority of people Miramar to Masterton was always too far for real local democracy. People don't want one uber-council," she said.
Meanwhile, the rejection of a Northland super city was welcomed by the Northland Regional Council. Chairman Bill Shepherd said the announcement ended months of uncertainty.
Local Government Commission chairman Basil Morrison said the decision to make Hawkes Bay a super city was based on public support. A final proposal has been issued by the commission but if 10 per cent of an electorate in one of the affected areas petitions for a vote, it will force an area-wide poll.
Super proposals
Wellington - rejected
Nine existing Wellington region councils would have been merged into one single body. One mayor and 21 councillors would oversee eight local boards of up to 10 members.
Northland - rejected
Three district councils and one regional council would have been merged into a single unit. The entity would have been supported by seven community boards.
Hawkes Bay - approved
Five Hawkes Bay councils will be merged into one if the plans go ahead. Plans from 2014 showed nine councillors would be elected from five wards.