Most of the Christchurch central business district was ploughed over by the former Canterbury Earthquake Recovery Authority after the quakes. Now, following a massive construction boom, a new commercial heart of steel and glass is rising from the bare land.
Christchurch’s retail recovery spans many sectors, but first: coffee.
Caffeine played a central role in the commercial recovery of Christchurch. When the 2011-12 earthquakes upended business in the central city and eastern suburbs, coffee from mobile vendors was the sustenance of choice for shocked Cantabrians.
This sector hasn’t stopped expanding and in the wider city, coffee culture is nearly at, well, saturation point. During the CBD rebuild, the cafes have also been the retail advance guard for downtown office developments to increase the appeal for office tenants.
The city simmers with impatience for its core to be rebuilt, but the financial, engineering and leasing factors may be the most labyrinthine test since the pyramids.
Within just the next 18 months, the CBD should be transformed by the completion of seven significant five-level office/retail/hospitality properties bridging the Avon River and the first of the the Crown’s anchor projects.
Now well advanced is the huge ‘Justice and Emergency Services Precinct’. When completed by Fletcher Construction, this precinct will be occupied by 2,000 people. Other major CBD projects will follow, though some, such as the planned convention centre, have been on an ever-evolving timeline.
The major catalyst for CBD retail growth is the steady build-up to around 16,500 people expected to occupy office space in the CBD within five years. City development is projected to double current resident numbers over 15-20 years, starting with east and north frame residential precincts housing up to 2200 residents.
The test for retailers is to hang on as the new city rises. The beacon throughout has been the premium Ballantynes department store which reinvested in a full-store refurbishment, and Re: START, the container mall acting as a conduit until new builds are complete.
The driving force for CBD growth has been private commercial/retail development. Matching funding with design and engineering requirements has been extraordinarily complex and frustrating. A daunting challenge is leasing at competitive levels while recovering the high cost of constructing heavily engineered structures and achieving yield.
CBD rentals have soared post-earthquakes to include the higher costs of constructing up to the new seismic resistant National Building Standard. All the new structures in Christchurch are at or above 100 percent of the code.
“However, we are still leasing at less than Wellington levels and a lot less than in Auckland. Although the catchment is of similar size to Wellington, central city Christchurch is more affordable,” said Nick Doig, director of retail leasing at Colliers International.
While office development has been progressing rapidly on Cambridge Terrace, retail/office projects are converging on the Cashel Mall – Hereford Street – Colombo Street axis. The Terraces retail and hospitality development on Oxford Terrace has been halted since New Year but a resumption is expected soon.
Quickly advancing is the multi-level BNZ Centre being constructed between Hereford Street and Cashel Mall by Leighs Construction for Lichfield Holdings.
This development, architecturally designed by Sheppard & Rout, is being constructed in two stages. Stage one of the 29,000m² development is a six-storey building, with mezzanine carpark is well underway.
The larger, 18,600m2, U-shaped Stage two is a five-storey building, with a mezzanine carpark which will be accessible from Stage one via two bridges. Stage two is targeted to be completed by December 2016. This development is popular, with the office area already 70 percent leased. Approximately 5,000m² of retail space on the ground floor will provide an array of amenities for staff.
Developer Nick Hunt told NZRetail it has been a demanding project: “For the last six years I’ve been running on adrenalin.”
Office rRentals reflect mostly the cost of prime land and vary in the inner city from $325-$425/m². Retail on Cashel Mall is likely to reach $1,200/m² but will vary according to site. Retail rents were double pre-quake levels, and retailers had not needed financial incentives to sign up.
Balconies on office floors overlook a central courtyard. At the heart of the square, a 1000m² landscaped public green space area will provide an attractive, sheltered and sunny space away from easterly winds and traffic.
BNZ Centre terms are averaging 12 years but with some leases at six to nine years. Major office tenants are the BNZ, ACC, Statistics New Zealand, Internal Affairs and the NZ Transport Agency.
The Hereford St frontage includes food and beverage shops such as Wendy’s, Robert Harris, BurgerFuel, Hachi Hachi, and Tandoori Palacea Hhigh- end Indian Ffusion Rrestaurant.
Other tenants include Unichem, Spark, souvenir chain Simply NZ, Michael Hill, and Pandora. The courtyard and retail section is designed to be highly accessible to the public through lanes.
Off the foyer of the new BNZ Centre is a temporary coffee shop scratching out an existence as a pit stop outside the new store of independent booksellers Scorpio.
Scorpio’s old store on Hereford St was a central city haven for city workers pre-2012 but was demolished. Their Riccarton Road store traded on and the owners kept a torch burning downtown from the containerised Re:START retail hub before relocating in 2016 into Stage 1 of BNZ Centre.
Nick Doig said “good traction for retail” will flow from numerous laneways connecting to streets and adjacent sites.
“From a leasing perspective, the frontages to Cashel Mall and Hereford Street are occupied, which is really encouraging.”
On the former Triangle Centre site in adjacent Colombo St, Leighs Construction is also constructing the eight-level $80 million ANZ Centre for CHC Properties’ Tim Glasson, founder of Glassons retail chain.
The ANZ Centre is a pivotal site in the heart of the retail precinct, with a strong retail focus onto Cashel and Colombo Sts, wrapping around into High St. It has attracted key tenants ANZ and engineering consultancy Beca, and Hallenstein Glasson will have a flagship city store over two levels. Mecca Maxima will open its first New Zealand store there. Hip clothing and homewares store Superette will make its Christchurch debut and high-end Partridge Jewellers is an early signing.
The development will cater for approximately 570 car parks and incorporates large ground floor retail of 1500m²-2000m². Part of the ground floor retail will open in time for pre-Christmas 2016, with tenant fit out from mid-2016. The ANZ Centre will be fully completed by early 2017.
Carter Group is constructing an architecturally stunning $140 million 14,000m² structure, The Crossing, which balances the historic 1935 style of its cornerstone building with the intimate ambience of laneways, bridges and other new additions.
“This is a big development – it covers a one-hectare block between Cashel Mall, Colombo, Lichfield and High Sts,” says Philip Carter, chief executive of Carter Group.
When The Crossing opens in 2017, there will be 17,000m² of retail and hospitality. A 1,250m² FreshChoice supermarket is one of the largest new retail tenants to commit to the CBD since the earthquakes. ASB will open a new Christchurch central city branch and South Island regional centre within The Crossing. International fashion brand Topshop Topman will open its first South Island store. There is access to 630 parks and direct pedestrian link to the city’s new bus interchange.
Guthrey Holdings is poised to redevelop at 126 Cashel St. It has owned the prized 2,000m² site for 30 years, dating back to the days of the old Bells Arcade before it was redeveloped into the Guthrey Centre in 1986.
“We’ve never intended to sell this site and have always regarded it as the premium site along the retail precinct,” owner Peter Guthrey has said. “Nothing has changed and we’re still as committed as ever to providing an excellent retail building in the CBD.”
Director of retail leasing at Colliers International in Christchurch Nick Doig says prospective anchor tenants recognise the special nature of the Cashel Mall site.
“It’s extremely rare that a site like this becomes available with the opportunity for a retailer to have a design build to meet their requirements. We believe the most likely tenant will be a large format specialty retailer who will provide a further anchor to the City Mall.”
The site will directly access into a repaired rebuilt Christchurch City Council car park building, one of four car park builds in the area.
The Re:START container precinct fired huge interest when it was first built as a catalyst for the CBD, but is now winding downits time is limited. The iconic Johnson’s Grocery store closed three months ago and the entire zone will vanish in early 2017. Like Cuba, see it now before its charm is swept into history.
Some of the old city’s gems have been restored to operational level. New Regent St has been restored with boutique businesses in a stunning heritage setting paved for pedestrians and tracked for the heritage trams of Christchurch Tramways.
Jeffrey Gao, whose two shops Café Stir and Coffee Lovers were closed for 27 months for repairs, told NZRetail that before reopening he wondered where the customers would come from. He spent his ‘temporary retirement’ studying coffee retail.
“We love this street and I’m very happy,” Gao says. “We are like a shopping mall with a great mix.”
Directly opposite, Kat McCorkindale faced regulatory obstacles in establishing The Institution licensed craft beer bar. A council requirement for 2m x 2m wheelchair access was incompatible with the heritage design of the miniature site. Thanks to the street’s hospitality collective, it is now flush with on-street facilities.
McCorkindale said CBD hotels generate tourist traffic, and the council’s new $40 million Margaret Mahy playground spills parents into the little street.
The colonial era design of the former Occidental Hotel, once on Hereford St, has been replicated by developers Miles Yeoman and Craig Newbury’s Canterbury Property Investments as the Corianders restaurant in St Asaph St. On Welles St, an old street that time has passed by, they are building a lookalike to a San Francisco fire station. They also plan a $10 million redevelopment of the former Excelsior Hotel corner in Manchester St with boutique retail and hospitality tenants.
In a city thirsting for parking buildings, the repaired South City Shopping Centre on Colombo St has car-parking galore and thrives. Nearby, the new flagship store built for Smiths City has added bulk retail to this precinct.
Moorhouse Avenue, a prime location for bulk retail before the earthquakes, has reasserted itself, with new retail attracted by passing traffic counted at 40,000 vehicles a day.
The Midway Moorhouse shopping precinct has attracted retail tenants leveraging the site’s advantages as a destination shopping experience. Stores have a high ceiling, large windows and lie to the sun to create a desirable location for customers to visit.
The site has 300 car parks and a mix of 12 retail outlets. Hunter Furniture reopened there in 2013 and sub-let to The Home Theatre Store and Kitchen Things. Total Food Equipment, La-Z-Boy, Pet Central, Chain Reaction Cycles, Asko Design, Powerstore, Furniture Concepts and Back to Bed are also tenants in this precinct.
Nick Doig says the former Powerstore site has released 2,600m² for a new Farmers homestore and with the addition of two further large- format stores on the cardstwo other large format stores: “The face of Moorhouse will change considerably.”
In old Sydenham, The Colombo shopping centre has established a reputation for quality fashion and well-performing food and beverage after the earthquakes. Two further stages will become available for leasing.
For some CBD retailers, The Tannery retail and entertainment complex in industrial Woolston was a welcome refuge after the destruction of the inner city. The 20,347m² site has 65 tenancies, mostly boutique shopping. Two new tenancies have been added; Alice’s art movie theatre and a lounge. The Tannery net leases range from $300-$500m² – a far cry from Westfield’s $1,000-$2,000m² levels.
Beyond South Hagley Park, Lincoln Rd is a mixture of new high rise office properties, new food and beverage, and traditional early 20th century shops.
Running northwest, Victoria St captures premium customers from affluent suburbs and is evolving as a retail destination with high-end interior design stores such as Cavit & Co at Knox Plaza, Matisse, and Belle Interiors. Net leases are ~$450-$550/m² on six year leases.
Retail in the city end of Victoria St is, however, in shock at the unexpected move by the council to close two blocks north of Christchurch Casino to cars and substitute 55 trees for 50 redundant on-street parks. The owner of the Frogmore interiors stores, Rosie Austin, a street veteran of 22 years told NZRetail she was appalled after refurbishing her store last year. She is relocating to Merivale.
On its Papanui Rd frontages, the Merivale retail precinct has seen new retail build over four years. Walker Architecture designed a block of six two-storey shops with retail ground on floor areas from 40 m² to 80 m². Tenants include Issimo, Dfusion, Alabaster’s Pharmacy and Cruiseabout.
The newest retail is the 2016 opening of a four-store site featuring Rodd & Gunn, Wallace Cotton and two more retailers.
Colliers is leasing the last space in a new retail development on the corner of Merivale Lane and Papanui Rd where the existing tenants are Metro Cafe, Deval Boutique and Petersens Jewellers.
Christchurch International Airport is actively extending its property portfolio both industrial park and retail. A fledgling retail community has been launched aloft at Spitfire Square behind the refurbished Sudima Hotel. Leases so far include food and beverage stores BurgerFuel, Subway, Little India, Mexicali, Muffin Break and Su Ra Teppanyaki, adjacent to a Countdown supermarket, Unichem, Anytime Fitness and Treasury Souvenirs. Rentals range from $300m²-$600m².
This story originally appeared in NZRetail magazine issue 744 June / July 2016