Wellington city has witnessed an extraordinary wave of retail leasing activity in January and February. Leases were signed for fashion retailer Storm, Melbourne-based Mecca Cosmetica, Andrea Moore, Caroline Sills, Crabtree & Evelyn, and Flight Centre is planning to roll out a new format store at Cable Car Lane soon. The retail leasing market is humming. I have never before seen such a strong demand for retail space so early in the new year.
As a consequence, there are fewer retail vacancies. Lambton Quay has 246 shops (49,000 square metres) and currently there are only three shops vacant along the golden mile strip (500 square metres), which are all in secondary locations. International retailers are frustrated by the lack of space and options on the golden mile. I have a simple request to existing retailers: if you want to exit the market, tell me.
The retail scene is going to change dramatically with the David Jones department store, Topshop, Seed Heritage, RM Williams, Jamie Oliver’s restaurant and Mecca Cosmetica, Vance Vivian’s concept store and Bailey Nelson. The new Countdown supermarket at Cable Car Lane will also add new energy to the golden mile, and of course it has also confirmed a new supermarket at the Reading complex next year.
There is no question about it that the pending arrival of David Jones will add further vitality and prestige to Lambton Quay. David Jones’ decision to set up shop here has put Wellington firmly on the map as an important retail destination. The department store has become a catalyst. We have experienced a significant increase in enquiries from Australian retailers, particularly fashion operators, many seeking space in the "David Jones zone".
The upmarket department store already has a very good knowledge of the customer buying patterns on Lambton Quay, with the benefit of the parent company’s ownership of Country Road, Witchery, Trenery and Mimco. David Jones is big on focus groups to better understand customer shopping habits inside and outside David Jones stores. One of the store’s key demographic groups is the 18 to 35 age group. Last year, David Jones reduced a number of its product lines to devote more space to better performing brands. The decision has paid off, as the department store is posting solid trading results. To help build a Wellington customer database, David Jones is offering a draw of $25,000 in gift cards via their website.
Will David Jones introduce a trans-tasman customer loyalty card? after all, last year 165,000 people flew out of Wellington to Australia, some on shopping expeditions. David Jones has 38 stores to choose from.
David Jones has promised a “worldclass shopping environment” for 165 Lambton Quay, formerly Kirkcaldie & Stains. The international retail influences will raise the bar in shop fit-outs. It will force other retailers to lift their game to compete in the challenging marketplace. It is not unusual now for retailers to spend as much as $5000 per square metre on shop fitouts. Retailers are creating unique ‘shopping experiences’ to counter the growth in online sales. There is already evidence that this is working. This is good news for property investors.
Some retailers are trading longer hours during the week to maximise after-work sales and are considering extended trading hours for such events as Festival of the Arts and The World of Wearable Art.
On Lambton Quay, we have seen an interesting trend emerging. Medical centres are opening everywhere on the golden mile. The latest one will open on the first floor of 342 Lambton Quay at the end of March. All are designed to provide convenient locations for busy city workers.
Wellington’s business leaders are to be commended for promoting the proposed $134 million convention centre and movie museum for the capital. It is predicted that the movie museum alone will attract 350,000 visitors per annum, all important potential customers for the retail sector. The twin attractions are expected to open in early 2019.
The announcement of Singapore Airlines’ air links to Wellington in September is a windfall for retailers. The increase in tourists will also encourage more international brands to the capital. Luxury brands have made it clear that when there is more evidence of tourists from Asia, Wellington will be considered. It is worth noting that year ending March 2015, visitors from Asia spent $77 million in the Wellington region – a 28 percent increase on the previous year.
For Christmas trading, Wellington City Council needs to adopt a bold initiative. Lambton Quay should be closed off to cars and buses and create a pedestrian friendly precinct in the critical weekends leading up to the final festive trading period. Such a move will only effect 26 car parks on the entire Lambton Quay strip. In the past, the excuse has been that it would be too disruptive to car parking.
Imagine street buntings, entertainers and street stalls. All would add colour to the street atmosphere. I would like to see car parks free in the final week of Christmas trading. Given the fact that the commercial sector contributes over 46 percent of the Wellington City Council’s rates income, there is a view that the suggested initiatives would be an appropriate gesture from the council.
The next step, perhaps a permanent pedestrian precinct for Lambton Quay?
If there was an award for quality designs in commercial property developments, the accolade would have to go to Mark McGuinness of Willis Bond for his continued innovation and influence on the city’s landscape. There are plenty of examples.
The original slogan of the positive city campaign, ‘Absolutely Positively Wellington’, which was launched 25 years ago, is still very much alive.
Ty Dallas is an associate at Colliers International in Wellington. This opinion piece was part of a speech he gave at the Property Institute recently.