Retail property performance: a tale of two cities

Retail Property
(Source: Bigstock)

The retail property sector in New Zealand’s twolargest cities – Auckland and Wellington – recorded stable performance last year despite the disruption of the Covid-19 situation, according to Colliers NZ. 

In Auckland, the regional vacancy rate was 5 per cent during the mid-year before dropping to 4.8 per cent by the end of the year. In particular, shopping centre vacancy rates fell from 3.5 per cent to 3.1 per cent, while suburban strip vacancies dropped by 0.7 per cent.

However, the retail vacancy rate in the city’s CBD peaked at 14.4 per cent.

Colliers also said high incentives and operating expenses resulting from inflation caused an increase in gross rents in the city. 

Meanwhile, Wellington’s CBD retail sector enjoyed a 2.9-per-cent drop in the vacancy rate from 7.8 per cent in 2020. The reports showed rental rates within the bulk retail sector held steady over the six months to December but low vacancy rates point to a resumption of rental growth over the remainder of this year.

Colliers predicts the retail sector will rebound with the removal of Covid-19 related trading restrictions and the reopening of borders. The retail property sector will see strong demand for bulk retail, large-scale mall, and specialist retail outlets. 

“Challenges, however, will persist given the likely impact of inflation and increasing interest rates on consumer spending,” the real estate agency said. 

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