Despite some 57,000sqm of new space being added to Auckland’s retail inventory in the second half of this year, the prospect of new developments remains “muted” according to real estate specialist Colliers.
The latest edition of Colliers Essential Auckland Retail Report covers the period when the 18,000sqm Commercial Bay development opened in Auckland’s CBD, along with the giant Nido furniture and homewares store in West Auckland and a new Bunnings at Westgate.
But the national director of research and communications at Colliers Partnership, Chris Dibble, says future development prospects remain muted as a result of the Covid-19 pandemic.
“Projects in planning and feasibility stages are likely to face delays until more favourable economic conditions emerge.”
Two significant projects already underway will boost the city’s retail footprint, however. Next month, the Sylvia Park Galleria expansion will open, comprising 19,000sqm, while in the first quarter of next year, the new Ormiston Town Centre will open its doors in Flat Bush, in the region’s southeast, adding a further 30,000sqm.
While Auckland’s retail sector has been significantly impacted by the trading restrictions associated with lockdowns, putting pressure on cashflow for both retailers and landlords, vacancy rates have moved relatively modestly compared to in Wellington, where CBD vacancy rate are up by about 50 per cent.
Auckland’s overall vacancy rate rose to 3.8 per cent, equivalent to about 67,000sqm compared to the 3.3 per cent recorded in the prior six-months.
Vacancy within the city’s CBD increased from 2.1 per cent to 2.8 per cent, equivalent to 1200sqm.
However, Dibble said there is still demand for space from international brands expanding within New Zealand.
Bulgari will soon join Auckland’s Queen Street luxury precinct, while Australian-based sneaker store Subtype has opened its first store, in Newmarket. Taco Bell plans to open two new stores (one in Auckland, the other in Hamilton) and US burger chain Five Guys has announced plans to expand into New Zealand and Australia by next year.
On the investment side, interest in large-format retail and supermarkets has been heightened by their perceived defensive investment asset characteristics, Dibble said.
A 13,700sqm Mitre 10 store in New Lynn recently sold for $32.5 million, reflecting a 4.74-per-cent yield to a local private investor.
