CBD retail rent builds revenue

Queen Street

Retail rents in Auckland’s CBD have reached new heights.

Iconic brands such as Top Shop, Louis Vuitton, Prada, Gucci, and Dior setting up shop are being held accountable for a rise of 12.4 per cent in the third quarter of this year. They are to be followed by Hugo Boss, Tiffany & Co. and Chanel shortly at Britomart and Australian retailer R.M. Williams at Auckland’s downtown CBD.

The research, released by commercial real estate company CBRE has shown an increase to $3,400 per sqm a year for Queen St, which is the highest jump since 2008.

It says Auckland’s CBD will be overwhelmed with building projects in the next few years, with motorists warned to avoid driving in the central city.

The CBRE report follows the release of Colliers’ 2015 New Zealand Retail Report, which highlights massive demand for retail in Auckland and vacancy rates at their lowest since 2007 at 2.4 per cent.

Another reason for the rapid rise includes an increase in the number of people living in the CBD and more international “luxury” visitors, according to the report.

The report adds that apartment living has become more acceptable and total employment in the CBD increased 15 per cent between 2010 and 2014.

This had led to an increase in pedestrian flow of 17.4 per cent in the past four years.

The ability of retail property to build revenue is underscored by the financial performance of NPT, a listed Kiwi property investor.

It increased first-half earnings 6.1 per cent as rental income from its retail buildings dragged up revenue, while a lift in the value of its overall property portfolio almost doubled profit. Revenue from its industrial and commercial buildings was flat.

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