The resurgence of the various central business districts throughout New Zealand is never more prevalent than at present.
Christchurch with its Four Avenues redevelopment around and near the new CBD heart by Ballantyne’s department store has really started to drive pedestrian traffic again. Although some time away from being a fully-fledged city centre again, it is apparent that there is a resurrection of retail and commercial activity and a high level of enthusiasm for a vibrant CBD environment.
This CBD return to favour is through the enthusiasm of local business people all of whom worked hard in an endeavour to “make the CBD great again” in the face of earthquakes and subsequent demolition.
New developments, predominantly funded by private equity, are emerging with major retailers and commercial tenants returning. This resurgence will likely see a gradual decline in rental rates in the suburbs of Christchurch all of which have benefited from demand for space and lack of it. The old supply and demand scenario is typical of the Christchurch environment changing as supply over demand takes over and location becomes competitive.
Wellington, with its traditional city centre developed around Lambton Quay and a little beyond is bursting at the seams with demand out performing supply. It is very difficult to achieve retail space to lease in high trafficked areas of the Golden Mile. Major retailers want to be where the action is and lack of space or availability in Wellington will drive these retailers to other locations.
However, I cannot see Wellington’s CBD ever being overtaken by other retail environments. I suggest the Wellington city centre will always remain vibrant and the place to be for retail activity in particular. There is unlikely to be any erosion of rental values, but the ability to grow beyond its present form will always be a problem for the city, and it will be strangled because of its lack of development growth. As a result property values will potentially tend to flatten
Auckland has seen a resurgence of its city centre with Queen St retailers gradually expanding south along Queen St. Two years ago there was concern that Auckland’s CBD was “shifting” from its traditional “Queen St” to the waterfront.
Some retailers have opened in these areas but the “Heart of the City” has been boosted by the introduction of popular branded retailers such as Topshop, and Farmers Trading Company and high end speciality retailers all located on the Queen St strip. Space is also becoming limited with large retail space for major retailers difficult to find in highly pedestrianised areas.
Regardless of the new retail development in lower Queens St currently being undertaken by Precinct Properties, I see no reason why Queen St will not continue to evolve with a high level of demand, particularly from retailers keen to take advantage of the growing affluent population group who work and live in the city.
Regional locations have found their CBDs eroded somewhat by the development of retail environments on the fringes of their cities.
Two examples are Hamilton and Tauranga where their respective city centres continue to lack vitality and consumers have drifted to The Base in Hamilton and Tauariko and Bethlehem in Tauranga.
Rotorua by contrast has retained its CBD with little retail development occurring outside of the city centre. The Tauranga and Hamilton examples are however not the fault of the CBD but rather the city fathers who failed to see what out of centre development can do to cities if not controlled.
There is no doubt that the traditional CBD has a place in cities throughout New Zealand. Whilst there will always be regional development driven by population demand, it is apparent that CBD activity is undergoing a resurgence nationwide.
An example of that resurgence is that regardless of the population growth in Auckland, there is not a lack of demand for residential accommodation in its city centre. As we commented last week, demand cannot meet the supply, and contractors are in high demand.
Vibrant CBDs make cities successful; the re-emergence of New Zealand CBDs can only be good for the country as a whole.