The report found that the New Zealand retail property sector is up against some challenges, but overall it’s faring positively.
It said positive economics conditions – including national house prices, strong population increases, and a booming tourism market – are helping the retail sector do well.
There are also more international retailers looking to claim a slice of the local market, while New Zealand retailers are keen to expand their store footprints.
Some of the key findings of the report were:
- New Zealand’s rising house prices are changing consumers’ perceptions of the amount of money they have to spend. At the moment, the perceived boost in their wealth from property is encouraging them to spend more.
- There has been a rise in new retail entrants to Wellington’s CBD, which has strengthened its market in less than 18 months. However, this demand means rents are rising and keeping up with this demand will be challenging.
- Auckland’s vacancy rates are at near record lows. Construction is underway, but many key areas are still not servicing the demand enough.
- In the regional areas, retailers locating themselves in a strong catchment while providing customers with the right product and service are experiencing the best outcomes. Landlords in these areas are aware of the difficult trading conditions retailers are operating in, but also have a need to increase returns.
The report also found that retailers located in Auckland’s lower Queen St area, which is home to international luxury brands like Gucci, Dior, and R.M. Williams, are paying $700,000 a year or more for a shop space.
Auckland CBD’s vacant space is the lowest it has been in eight years, with only 3030 square metres of available space in the area.
Prime retail rent is now hitting between $1700 to $4200 per square metre, compared to Newmarket’s $800 to $2000 per square metre and Ponsonby’s $750 to $1350 a square metre.
Total CBD supply has also reduced by 10 percent while construction begins on the Downtown Shopping Centre. This has put pressure on the surrounding area, as retailers have had to move out of the centre and into different areas.
The Britomart space where Chanel and Tiffany & Co. are moving into are almost fully refurbished, which will satisfy some of the demand for luxury retail space in the CBD.
Beyond the CBD, demand is also spreading. Newmarket’s vacancy rates are at four percent, while Ponsonby Road’s are at two percent.
Wellington’s CBD vacancies are up 8.9 percent, while its prime retail rents are between $1720 to $1855 per square metre on Lambton Quay, $753 and $1087 per square metre on Willis St.
A number of retailers are also signing up for new space, such as Platypus, Wittner and what Collier calls a “confidential major fashion retailer” as well as other international brands scouring around for a property to secure.
Christchurch is the second largest area for retail spending in New Zealand, making up 14 percent of the country’s retail spend.
Its prime retail rents at the city mall are between $650 to $1200 per square metre, while its CBD is between $600 to $800 per square metre.
The report found suburban retailers are setting up shop in locations with the strongest catchment, with areas with residential projects underway attracting retailers.
It also said opening announcements from international retailers such as Topshop are rallying the sector, with more announcements expected soon.
For more insights from the 2016 report and how other cities around New Zealand are faring, view the full report here.