A positive retail environment over the past 12 months has seen a large number of new retail developments and expansions popping up throughout the country. In part one of this series, we introduce the issues at play, and examine some of Auckland's most exciting developments.
New Zealand’s strong population growth and booming tourist centres are largely to thank for the upward trend in retail developments. At 3.73 million international visitor arrivals in 2017, and with numbers expected to rise each year until 2023, retailers in key regional areas are reaping the benefits.
Tauranga and Queenstown continue to benefit from strong population growth and tourist inflows, and this is reflected in the number and size of retail developments in the areas.
Chris Beasleigh, Bayleys national director retail sales and leasing, says while Auckland is still number one in terms of growth in New Zealand, the growth in Tauranga and Queenstown is significant.
“These three centres are the places in New Zealand with the quickest growth and shopping centre activity is reflecting that. It’ll be interesting to see how the population boom continues in those areas.
“Auckland is getting to the size where it’s easier to attract international tenants and that changes and improves the retail offer we have in New Zealand.”
The biggest change in new retail developments is the diversification of the offering, he says.
No longer are customers visiting a shopping centre just once a week to do their weekly grocery shop. New developments are turning shopping centres into town centres, with food and beverage, leisure activities and essential services such as doctors’ offices and pharmacies.
“The big word is ‘experience’ - that is what the shopping centres are really looking for and we’re going to see a lot more of that in new and redeveloped centres to attract the punters. We don’t want a vanilla line-up of shops, people can go online and buy all that, so why bother going to a shop?” Beasleigh says.
“The way we are shopping is changing and retail developments are catering to the change and doing things to keep attracting foot traffic through their shopping malls.”
Colliers International research manager Leo Lee says retail development in New Zealand is currently at a healthy level.
“It was similar to the commercial sectors in 2017: all sectors have been doing well, which is stimulating new developments across the board. It’s also linked to strong population growth and a growth in the economy.”
The election year and change of government brought with it a predicted dip in spending in 2017, and the ANZ Business Confidence Index turned negative in October. However, survey responses were mostly received before the formation of the coalition government and reflected uncertainty around the outcome rather than the outcome itself.
Lee says overall the trends are positive and consumer perceptions have been really good in the last year.
While there is steady growth in retail developments, there are still parts of the sector struggling to compete with growing online competition. Low-cost fashion retail stores are hit the hardest by the trend, notably, TopSshop closed both Wellington and Auckland shops in October 2017 after failing to find a suitable buyer while in receivership.
Beasleigh says online competition makes it all the more important for shopping centres to diversify to be able to attract the number of customers needed.
Auckland’s Commercial Bay development is set to transform the retail experience on the city’s waterfront.
Owned by Precinct Properties, the $941m development includes the 39,000sqm PwC Tower and the 18,000sqm Commercial Bay retail centre. Phase one of the project, about 20 percent of the final offering, is scheduled to open to the public in mid-2018. The project is due to be completed in early 2019.
The retail and dining spaces span three levels, at the centre of which will be the new food hall: Harbour Eats. The Laneway-style food hall was designed by New York-based AvroKO. The retail space is expected to be home to 100 stores, at a mix of 30 percent major retailers, 45 percent specialty retail and 25 percent food and beverage.
Precinct Properties senior development manager Michael Sweetman says the project will align Auckland with the international trend of CBD renaissance.
“The city has been realigning on an east-west axis in recent years, with Wynyard Quarter to the west and Britomart to the east. Commercial Bay completes the missing gap in the continuing waterfront realignment.
“Commercial Bay will also reinstate Queen St’s connection to Quay St with a new block of Queen St retail flanking the laneway-based development.”
Designed by NH Architecture and Warren and Mahoney, Commercial Bay connects the new PwC tower with the HSBC, AMP, Zurich and 188 Quay St towers.
Elsewhere in Auckland, New Zealand’s largest shopping centre, Sylvia Park, is continuing to expand. The Kiwi Property-owned shopping centre opened a new dining precinct, The Grove, in December 2017 and has further expansion plans on the cards for 2018.
Following the trend of shopping centres investing in food and beverage, The Grove offers 12 brand new eateries, in an open setting with a performance space.
Kiwi Property chief executive Chris Gudgeon says new developments at Sylvia Park reflect the way the customers are using the shopping centre.
“Sylvia Park is increasingly becoming a town centre rather than a shopping centre and we consider ourselves in the business of town centres now. A big reason for the change is because urban pressures are mounting, and people need more local options.”
Currently under construction are a new $80.2m 10-level office block designed by Architectus and a new parking building with about 1500 extra car parks. Both projects are due for completion in the middle of this year.
The next big stage is a $200m galleria expansion with an extra 20,000sqm of floor space including a new Farmers department store and new international mini-majors. Some yet-to-be-announced brands will be new to the centre and the country.
The Buchan Group is designing the changes, which, including all existing parts of the centre and the new 10-level office building, will take the overall indoor floor space to more than 100,000sqm.
An announcement is expected on when the development will be greenlit for construction in mid-2018.
“It will round out Sylvia Park and will cement it as New Zealand’s premier shopping destination,” Gudgeon says.
No expansion plans for Westfield Newmarket have yet been released, but an announcement from owners Scentre Group is expected during the first quarter in 2018.
If expansion plans proceed, it is speculated the centre will expand from its current 31,000sqm to 78,000sqm. Proposed new anchor tenants include Farmers, Countdown and cinemas. The proposed $650m expansion would look to capitalise on the busy shopping centre, which gets five million visitors annually.
Scentre Group regional PR manager Debra McGhie says an announcement is still a number of weeks away.
“We continue to focus on infrastructure works and enabling works ahead of making a formal announcement. It is our intention to inform the centre’s customers of our plans as soon as we’re in a position to make an announcement regarding the future plans at Westfield Newmarket.”
This story originally appeared in NZ Retail magazine issue 754 February/March 2018