There is a growing demand for prime retail central city space in New Zealand, especially in Auckland and Wellington, as local and international retailers vie for Kiwi consumer dollars, a study conducted by Bayleys revealed.
The latest Bayleys Research Wellington Retail survey showed, “things are on the up for the retail market with increased leasing activity forcing down vacancy rates within the CBD core and lifting rents”. The study revealed there is strong demand for quality retail prime locations, such as Lambton Quay and Courtenay Place.
In Auckland, there is a wide gap in the performance between prime and secondary property. The A grade property, which is made up of shopping centres and strip retail in “excellent” locations, are the most sought after retail locations.
Tenants are demanding a higher quality of premises, and secondary property owners are having difficulty filling space, the Bayleys Research January 2015 Retail Vacancy Survey showed.
According to the study, the A grade property is the best performing grade, with just 1.6 per cent of units surveyed as vacant. The majority of vacant space in Auckland is made up of B and C grade stock with 7.1 per cent and 7.3 per cent vacancy respectively.
There is less demand for secondary property in Wellington, as opposed to its premium properties. Although, according to the study, there has been an increase in uptake within the CBD in secondary graded strips, most notably Featherston Street, over the past year, which more than halved its vacancy rate to seven per cent.
The research further mentioned “the expansion of the bulk retail sector has come to light with phase two of Wellington Airport retail park gaining three committed tenants; Chipmunks, Pet Centre and a boutique supermarket kick starting the go ahead for this stage with now only approximately 390sqm of space to be finalised.”
The Wellington Airport has had a busy twelve months, also increasing their international traffic by 20 per cent year on year, the Bayleys research stated. Pipeline plans to revamp the terminal and makeover the retail and dining precincts will increase the building by approximately 6,000sqm to cater for these increases going forward.