Increasing demand for Queen St retail space

Tuesday, 26 April 2016

If you're looking for a pie from a warmer or a trinket for a child's birthday party, you might need to go somewhere other than downtown Auckland to find it.

Lower-end retailers such as discount shops and convenience stores are being pushed out of Auckland's central business district by an increase in demand for retail space.

Colliers' retail leasing associate director Nilesh Patel said it was particularly noticeable in Queen St.

'For example, Global Culture have taken the former City Convenience store and Istanbul Kebab stores at 94 Queen St and telecommunications giant Spark is now trading out of the former Fix Convenience Store on the corner of Queen St and Wyndham St.'

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The arrival of larger chains – both national and international brands – is seeing lower-end operators driven out of, or to different precincts within, Auckland City, Patel said.

'Landlords now have the ability to charge more rent.'

Viv Beck, chief executive of business group Heart of the CIty, said there had been progressive change in the retail mix of the central city. She said there was a time when Queen St was criticised for having too many convenience stores.

'Now we are seeing more international brands and significant national retailers. It's a place people want to be.'

She said retail spending was up 17.6 per cent in the most recent quarter compared to the same time the year before. About a third of that was from international visitors. 

It's a trend that Colliers' brokers first noticed post 2011 – and after the Rugby World Cup – which had become even more prevalent in the last 18 months, Patel said.

'New Zealand is really starting to be recognised on the world stage and this is translating into significant tourist retail spend within the Auckland CBD – particularly from the likes of cruise ship tourists and visitors coming into the country.

'Tourism New Zealand anticipated that the 2015-16 season would welcome 127 cruises, with the economic impact to New Zealand forecast to be $543 million.'

An increase in global exposure meant New Zealand was also seeing the arrival of more international tourists on its shores – from 86,596 in 2010 to 104,418 in 2015, Patel said.

'Global brands are capitalising on the increased super-diversity of Auckland, and streets of the CBD are starting to reflect that with more and more of an international flavour.

'Auckland really is starting to feel like a global city – alongside the likes of Sydney and Melbourne.'

Vacancy rates are at record lows.

Precinct Properties' development on the lower levels of the new PwC Tower was expected to provide the opportunity for approximately 100 retailers across 18,000sqm, Patel said.

Tenants have been given notice on the Downtown development, with construction due to start soon.

'A key benefit to the mall closing is the opportunity for new entrants in the Auckland market to establish themselves within the city,' Patel said.

One of the newest additions to the mid-CBD is The Warehouse, which has now opened its store in the Atrium on Elliot, Patel says.

'The mid-CBD precinct is expected to receive a lift in pedestrian flow in the future with the Convention Centre, City Rail Link Aotea station and the proposed Auckland NDG Tower.'