Vacant retail space in Wellington’s CBD rose to more than 7000sqm in the June quarter reflecting a vacancy rate of 6.7 per cent as the Covid-19 crisis caused the demise of some retailers.
That vacancy rate is up more than 50 per cent on the 4.1 per cent recorded in the December quarter, according to data released by Colliers International.
“The increase was largely influenced by a small number of larger units which have become available in the Willis Street precinct,” the real estate company reported in its half-yearly Wellington Retail Report.
Covid-19’s effect of driving consumers online is accelerating changes in the physical retailing space as brick-and-mortar chains look to establish or expand their e-commerce presence.
“The greater familiarity with online shopping is accelerating change within the retail sector such as the proposed development by Countdown of a new dedicated ‘eStore’ in Wellington following the success of the first concept store in Auckland,” said Chris Dribble, national director of Colliers partnerships, research & communications.
Retail development in Wellington remains muted with a majority of the pipeline comprising small ground floor retail spaces in residential projects or offices.
“This coupled with an increasing amount of stock being removed for refurbishment has seen a reduction in total floor space from 112,530sqm to 111,618sqm in the latest survey.”
In the capital city’s trendy Cuba Street precinct, some 1100sqm of prime retail space will be added in coming months when refurbishment works are completed on the former Farmers department-store site. New tenants already signed for that space include telecom company Spark and apparel chain Glassons.
Meanwhile, Colliers says investor interest in large-format retailing and supermarket-type stores has been boosted by what it describes as their “defensive investment asset characteristics”.
In one case, a property at 98-100 Abel Smith Road in Te Aro, occupied by Liqourland recently sold for $6 million, representing an approximate initial yield of 5.75 per cent to a local private investor.
