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What the Auckland Unitary Plan means for retailers

Auckland is set to become a more compact, intensely developed city, with the now-revised Auckland Unitary Plan allowing more than 400,000 new properties over the next 30 years. But does the plan allow for enough retail development to cater for all this growth?

By Denise Piper | November 17, 2016 | Property

Chris Beasleigh, head of retail for JLL.

Auckland is an exciting place to be doing business with plenty of new opportunities for retail growth, according to Chris Beasleigh, head of retail for real estate service and investment firm JLL.

“It’s a pretty cool city. I think we’re heading in the right direction.”

Excitement is centred on the Auckland Unitary Plan – the city’s blueprint for the future – with Auckland Council releasing a revised ‘decision version’ in August. While the plan is still subject to an appeal process, it is set to encourage compact, high-quality growth.

This is great news for retail businesses, Beasleigh says.

“We’re going to have an extra 500,000 people living in our inner centre. They will more than likely be in apartment living, and they are more likely to eat out more and use services more than people in a house,” he says.

“The great thing about Auckland growing so quickly: there will be more demand for retail space.”

The Unitary Plan ‘decision version’ is a great start and an important stake in the ground for development, according to Phil Eaton, president of the Auckland branch of the Property Council and managing director of property consultants Greenstone Group.

“We’ve got certainty. Developments typically take two to three years to get off the ground and get built. This enables everyone to get on with things.”

Eaton is pleased the plan caters for apartment living and smaller houses, such as in the Mixed Use zone where retail is allowed on the ground floor, with apartments above.

The plan allows for more affordable housing in Auckland, which has an important relationship with retail spending, he says.

“[Affordable housing] directly affects disposable income for households. If we don’t address affordable housing then people will be stretched,” Eaton says.  

John Duguid, Auckland Council’s general manager plans and places.

Development from the centre out

The Auckland Unitary Plan promotes a ‘centres-plus’ commercial growth strategy, explains John Duguid, Auckland Council’s general manager plans and places.

This encourages commercial activities in ‘Centre Zones’:

  • The City Centre – Auckland CBD and surrounds.
  • Metropolitan Centres – regional centres including Takapuna, Newmarket and Sylvia Park.
  • And Town Centres – hubs for the community, from Wellsford in the north to Takanini the south.

Retail will also be encouraged on ‘identified growth corridors’; however, just four are in the plan: Lincoln Rd, Wairau Rd, New North Rd and Te Irirangi Drive.

This ‘centres-plus’ strategy aims to cluster commercial activity to the centres, in order to reduce infrastructure costs and encourage alternative transport, Duguid says.

Commercial activity is also allowed in other areas, where appropriate, but will have to get resource consent, he says.

New retail can also go in ‘General Business’ zones – with more General Business zoning in places like Apollo Drive and Constellation Drive on the North Shore, and Lunn Ave in the east.

But Jeremy Wyatt, Auckland Council’s principal planner, admits a lot of this planning recognises what is has already been built in these areas, rather than opening up new areas for development.

More retail can be expected in Manukau, where the Unitary Plan expands the Metropolitan Centre significantly to the south-west.

“It gives flexibility there,” Wyatt says. “The Manukau area is now big-box retail; it allows that big-box retail to become any sort of retail.”

The Newmarket Metropolitan Centre has also expanded to include the former Lion Breweries site on Khyber Pass Rd but, as this is a University of Auckland campus, it is unlikely to be turned into a large retail area, Wyatt says.

A new opportunity is the Mixed Use zoning for Barrys Point Rd on the North Shore – a change from Light Industrial, he says. (See sidebar.)

There is also a lot of capacity in developments that have already started, such as the Westgate/NorthWest shopping area.

“The Westgate centre has been earmarked to be a Metropolitan Centre for a long time. We haven’t expanded the zone further but we have allowed for the centre’s continued expansion.”

Albany centre also still has vacant land, despite being zoned for commercial development for 10 years, Wyatt says.

New Local Centre zones – which allow retail to meet local needs – are also planned in areas where significant residential growth is expected, including Hobsonville, Silverdale’s Argent Lane (to the west of the motorway), Long Bay, Flat Bush, Papakura and Westmere.

Chris Beasleigh from JLL says the Unitary Plan also offers some great opportunities for local, suburban retail offerings, which can be very successful if done well.

“It’s the suburban eateries, the artisan shops, in areas that you wouldn’t have thought of putting them in. I think a lot of people are going local and that’s really big.”

Key players include large retailers

The centres-plus approach was agreed to during mediation on commercial and industrial provisions. The parties agreeing to the mediated position included the Key Retailers Group, an alliance which includes:

  • Scentre Group – owns and manages Westfield shopping centres.
  • Kiwi Property – owns and manages centres like Sylvia Park and LynnMall.
  • National Trading Company – property holder of Foodstuffs, which runs Pak’n Save, New World, Four Square and Gilmours wholesale.
  • Progressive Enterprises, the company behind Countdown.
  • The Warehouse Group.
  • Bunnings Warehouse.

Urban design specialist John Mackay, while he is happy with the Unitary Plan overall, believes smaller retailers should be concerned about the influence of these large-scale retailers.

He fears the Key Retailers Group is pushing for large retail buildings surrounded by car parking, rather than dynamic main streets. (See sidebar on car parking.)

“Most business associations didn’t get their act together [for a submission] or, if they did, they focused on particular local issues,” Mackay says.

However, Retail NZ is not aware of any concerns about the Key Retailers Group, says Greg Harford, general manager of public affairs. He says the Unitary Plan is unlikely to be materially different if smaller retailers were more involved.

“The plan makes provision for all kinds of retail – as it should.”

Lindsay Rowles, general manager property development for Foodstuffs North Island.

Getting the balance right for retail growth

The Unitary Plan does not provide for a specific number of retail shops per se but aims to provide enough zoned space to accommodate expected commercial growth, Auckland Council’s John Duguid explains.

A study into demand found core retail activates will provide an extra 7000 to 9000 jobs expected by 2026. The zoning aims to meet this demand. But Foodstuffs North Island says, in reality, the plan does not allow much space for new supermarkets.

“In practice, supermarkets are already present in most significant centres in the city,” says Lindsay Rowles, general manager property development.

“Intensification and population growth will generate a need for additional supermarket capacity that cannot be catered for within those centres, and the General Business and Mixed Use zones.”

Rowles says the only zone with enough capacity for supermarkets is the Light Industry zone, where supermarkets are subject to ad-hoc resource consent applications.

The Unitary Plan allows for large areas of new Light Industry zones, including about 450 hectares at Puhinui, 80 hectares at Pukekohe and 60 hectares in Warkworth. Trade suppliers, car yards, garden centres and dairies are allowed in the Light Industry zone but other retail is subject to resource consent.

Retail NZ’s Greg Harford agrees these rules are too stringent, with the resource consent process adding significant costs and time to any new retail. The Light Industry areas are good places to establish new big box retail, not only because land is available but also because the infrastructure is good, Harford says.

Auckland Council’s Jeremy Wyatt says supermarkets and big-box retail are not appropriate around industry, with supermarkets in particular being vital for city centres.

“I’m sure they would love to be in the centre if they possibly could. There isn’t always space… it’s just a balancing act of getting them in the most appropriate place if we can.”

The decision version of Auckland City Council's Unitary Plan was made public on August 19, and it became partially operative on November 15. For more information on the Unitary Plan process, see the council's timeline here.

The details: Heritage areas

The rules are stricter for retailers in Special Character areas or buildings with Historic Heritage. There are about 20 commercial Special Character areas where distinctive aesthetic qualities of the area are to be preserved – such as Parnell, Ponsonby, Devonport and Helensville Central.

In these areas, changes to the inside of the building do not require resource consent but changes to the outside may, John Duguid says.

Billboards to the side or back of the building are discretionary, but free-standing billboards or billboards on the front of the building are non-complying and will need resource consent.

The Historic Heritage overlay identifies specific scheduled buildings with heritage value.

With these buildings, the only signs permitted are ones for identification and safety. Any demolition, destruction or modification will require resource consent. 

The details: New developments

For new buildings or new developments, the Unitary Plan sets rules for the height and street frontage glazing – with different rules for different zones and precincts.

Auckland Council is trying to ensure developments are well designed, making places people-friendly and not turning people away with big blank walls, John Duguid says. New buildings will go through a design assessment but the council has stayed well away from designing the look and feel of new areas, he says.

The Warehouse Group’s general manager property Fiona Shilton agrees the ‘decision version’ of the Unitary Plan has removed a lot of the prescription that was in the original ‘notified version’, with more reliance placed on assessment criteria.

But Retail NZ’s Greg Harford would like to see more flexibility and less prescription with the plan.

“Prescriptive rules are unlikely to affect growth, but they may make it more expensive for development to occur. This ultimately flows through to higher prices for consumers,” he says. “We want retail to be accessible to the customer. We want an environment where retail can thrive: that means that retailers need to have a business-friendly environment and the most permissive environment possible.”

This story originally appeared in NZ Retail magazine issue 746 October / November 2016

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