This week, David Jones opens its first New Zealand store in Lambton Quay, Wellington. We all know this prime location, the building that previously housed iconic department store Kirkcaldie and Stains.
David Jones will do brilliantly well; it really is a no brainer.
However, its success will not be simply down to the strength of the brand, but rather the appalling retail shopping alternatives available in Wellington outside of the CBD.
This past week, in news that flew (mostly) below the radar, The Warehouse announced it plans to exit the Wainuiomata Mall. The mall has been in decline for some time, and with The Warehouse now set to leave in February 2017, the future of the mall looks precarious. It will effectively have one tenant remaining; Countdown.
The mayor of Lower Hutt, Ray Wallace, who is responsible for the local body governance of Wainuiomata was quick to suggest that whilst the exit was disappointing, it was not the end of the valley as we know it. As background, Wainuiomata Mall opened in 1970. That decade would see the busiest period of shopping centre development in New Zealand’s history. Retail competition had been restricted to the High St in Lower Hutt and young families were moving in to make their start. Wainuiomata’s population was around 20,000 people and growing.
When the shopping mall eventually changed ownership, the new owners simply had no idea what they were doing in terms of supporting management or maintaining the centre. As a consequence they were unable to retain tenants, and through sensible dialogue major tenants started to exit. Why is it that shopping centre owners let this happen? Retail tenants drive revenue. Leases drive property value. Without tenants the asset and its value are simply eroded.
Wainuiomata is a good case study of what not to do in property ownership. It also raises some serious questions around retail activity in Wellington generally.
When will the owners of Johnsonville Mall and Queensgate in Lower Hutt finally do something with these declining assets? Consumers in the greater Wellington area deserve a better retail offering than what they are getting. It’s all well and good that David Jones is opening in Lambton Quay, but this addition doesn’t solve the problems in the wider retail landscape.
Wellington retail needs a serious shot in the arm.
The ball is at the feet of the owners and developers; it is up to them to make something of the opportunity that exists, or risk further decline like that of the Wainuiomata example.
Paul Keane is a registered property professional and has vast experience in New Zealand’s commercial property industries. He provides retail and property consultancy including development management to many New Zealand property owners, developers and city councils. This post originally appeared on RCG’s blog.