Wellington retail market buoyant
“This is partly due to a return of Australian retailers after an absence of 10 months fixing their own local market challenges,” says Ty Dallas, retail leasing specialist for Colliers International’s Wellington office.
Because requests for retail space on Lambton Quay are now outstripping supply (currently 98.6 per cent leased), there is a renewed interest in other parts of the golden mile, including Willis St.
The grand lady of Lambton Quay, Kirkcaldie and Stains, will close its doors early next year and be replaced by Australian department store, David Jones. After a $20 million makeover, the 6,617sqm store will open late next year in time for the latest spring/summer fashion releases.
According to a David Jones spokesman, the extensive refurbishment plans will reflect its next generation store concept. “Our aim for Wellington is to create a world-class shopping environment with the quality finishings and latest retail technology that shoppers expect from a premium department store.
“Recently David Jones announced a 6.4 per cent surge in retail sales. Unquestionably David Jones will add further vitality and prestige to New Zealand’s premier retail strip – Lambton Quay.”
Colliers is already receiving requests from Australian retailers seeking space in the “David Jones zone”. Many Australian retailers refer to Lambton Quay as a “Westfield Mall without a roof”.
“In the final two weekends before Christmas I would like to see Lambton Quay closed off to cars and buses to create a pedestrian friendly precinct for the critical festive trading period. Given the fact that the commercial sector represents 46 per cent of the rates income, this would seem an appropriate gesture by the Wellington City Council,” says Dallas.
“It is interesting to note that Sir Robert Jones is the biggest retail landlord on Lambton Quay with 10,485sqm or 22 per cent of the golden mile stock.”
Melbourne-based fashion retailer, Seed Heritage, has confirmed a new flagship store on the corner of Lambton Quay and Grey St that will open in the first quarter next year. The iconic Australian brand, R.M. Williams, will open its first NZ store on the corner of Willis St and Mercer St early next year too.
The increasing Australian retail influence means a move toward annual fixed percentage increases in rent reviews. Retailers prefer this type of rent review mechanism so they can budget for the increases and avoid unplanned rent hikes. However, landlords are insisting that, at some point, rent reviews must be tested against market rentals.
To add to the increased activity on Lambton Quay, Countdown will open a 1,000sqm supermarket in Cable Car Lane and London’s Topshop will open a 1,215 sqm store near David Lawrence next year.
“We are seeing a trend toward larger retail stores with smart fit outs to counter online sales. In a highly competitive environment, retailers are spending substantial amounts of money creating special shopping experiences. It is not uncommon for retailers to spend up to $5,000sqm on fit outs,” says Dallas.
The new retail energy is not confined solely to Australian retailers.
Locally-owned Banks Group has rolled out a new brand, Snkr, on Lambton Quay next door to their new Shoe Connection megastore to meet the phenomenal growth in sneaker sales. Also, third generation menswear retailer, Vance Vivian, will open a new refurbished store on Lambton Quay before Christmas featuring a Canali Italian designer concept that will be a first for NZ.
Other retail developments in the city include Willis Bond’s Whitireia and Weltec complex in Cuba Street that will offer retail opportunities in the sought-after area. Wellington’s answer to Auckland’s Vulcan Lane, Lombard Lane on the corner of Victoria St and Manners St, will be completely rejuvenated. The trendy precinct will have 12 speciality stores, including a restaurant with an outdoor dining area. Lombard Lane will open in early 2017.
In addition, finally the Kumutoto Precinct development, a major development on Wellington’s inner city waterfront, has been given the green light by the Environment Court after years of debate.
The development will encompass a five-storey commercial building on Waterloo Quay with a walkway through to the water on the other side.
PricewaterhouseCoopers will relocate its Wellington office into the new building, and has the naming rights with the building to be known as the PwC Centre.
It is set to create an attractive space near the historic ferry building and provide shelter without blocking views down Whitmore St, on the opposite side of Waterloo Quay heading towards Lambton Quay.
Part of the ground floor will be used for retail, cafe, and exhibition spaces while other parts will have a “creative business hub”.
In big box retailing, Petone is emerging as a rising star with the planned Bunnings Warehouse’s 10,000sqm and Kmart’s 5,200sqm. Also, Briscoes will build a 2,500sqm store with a Rebel Sport 1,000sqm on Nevis Street near the Petone Railway station. The lack of land in Lower Hutt has put a new focus on Petone.
“I would recommend retailers seriously consider these quality developments,” says Dallas.
The 2015/2016 cruise ship season has started and it is estimated that it will inject $40 million into the Wellington economy. This is good news for retailers.
The unique compactness of the capital city with chic fashion shops, arts and sporting events, cafe culture and inner city living provides a vibrant CBD that does not always exist in other metropolitan cities.