The New Zealand Herald ran a story in Auckland over the weekend with headlines suggesting Auckland is now in a retail growth zone, with significant new retail developments emerging. So is it in a growth phase, or is this the “same old story” for retail, just a momentary change in media focus from housing stories? Paul Keane from insight led property and design company, RCG, has pondered this, and reflected on what has happened in retail development over the years. He says retail development
is driven by growth in population.
He explains that over time the most popular shopping centre developments have proven to be covered centres. In the mid to late 1960s, emerging new shopping centres in NZ were Lynnmall and Pakuranga in Auckland, and Riccarton and Northlands in Christchurch. They were the pioneer centres. They were not enclosed but rather a collection of shops with car parking available. By the 1970s the idea had gained momentum and in Auckland St Lukes, Manukau, Glenfield, Shore City, WestCity and Downtown were all born, while Johnsonville and Wainuiomata in Wellington were also developed. This decade, particularly the first five years of it, was the most active in shopping centre development in the history of NZ. It was not so much driven by population growth but by an international trend for shopping centre development, which was caressed by customers as the preferred shopping environment. Strip shopping as a result became a bit of a casualty.
By the 1980s demand for retailing increased further, with the famous trading hours extension moving first to six-day and then seven-day shopping. Customers wanted to shop on weekends, so demand for retail space became even more intense. By the 1990s the development of large format retail centres came to the fore.
Westgate, a new large format mixed-use form, was developed on a greenfield site in Massey, Auckland.
At the time, RCG forecast a population to service this centre of about 108,000 people over 10 years. Some commentators scoffed at the time that these figures would never be achieved. Westgate, however, was an instant success, and the new DNZ NorthWest Shopping Centre, which opens across the road from the original centre in October, is testament to the demand for retail space and the fact that the area now services some 500,000 people, with a predominant number of them on high incomes.
The $155 million NorthWest Shopping Centre, which is 27 000sqm (the size of four rugby fields), will generate up to 700 new jobs.
As a result, the growth in Auckland’s suburbs in all directions over the last few decades has boosted residential areas and thus generated the need for more retail, says Keane. “It is all rather simple, and it is not a proliferation of retail development.
“Southern cities such as Wellington have not benefited from population growth, so retail demand is not aggressive. Hamilton has had a significant increase in retail shopping centres, and that again is due to an increase in population. Christchurch is undergoing a resurgence in retail development, but significantly it is restricted to the CBD where the city is being rebuilt. Suburban growth is predominantly catered for and is not seeing the growth of Auckland.
“Over recent times NZ has been inundated with the level of online shopping, which is apparently hindering ‘real retail growth’.
“NZ Retail has been pursuing some form of taxation on online shopping, which the government is now pursuing. The irony is that bricks and mortar growth is still apparent. This will always be the case, regardless of online shopping, and particularly where population growth is apparent.
“One can only imagine the growth in spend in certain parts of Germany from the growth in population through the refugee crisis. And yes, before we get a comment, refugees have to be fed and housed and somebody will benefit. It’s called population growth.”