Auckland’s lowest retail vacancy rates on the Shore
An aerial view of the Rosedale Retail Centre where new premises have been ‘snapped up’
The North Shore’s retail vacancy rates are the lowest in the Auckland region and retailers are having to adapt to compete with new shopping trends, according to a survey conducted by Bayleys Research.
The latest survey of key retail locations across Auckland shows a vacancy rate on the Shore of 3 per cent - up from 2.5 per cent in 2015, but still below the region’s overall retail vacancy rate of 5.2 per cent, which is also up from 4.6 per cent last year.
Ian Little, national manager for Bayleys Research, says the most significant contributor to the North Shore’s increase has been the doubling of the Shore City shopping mall’s vacancy rate. “There was also an increase in the amount of empty strip retail on Hurstmere Rd, but this was nearly offset by previously vacant property on Anzac St and Link Drive being absorbed.”
Little says the increasing influence of ecommerce and changing shopping preferences have resulted in the closure of many traditional format stores, with mid-range clothing outlets appearing to be under the greatest pressure.
“The look of strip shop retailing is changing as an increasing number of hospitality and service providers, which don’t compete with the online shopping tussle for the retail dollar, take up space traditionally occupied by product retailers. This is very evident on the North Shore with, for example, an increase in the numbers of barbers and hairdressers, beauty salons and food and beverage outlets. Strip retailers need to offer consumers a point of difference for customers to visit their bricks and mortar locations, with some owners struggling to adapt to these new market demands.
“The headline vacancy figures also need to be viewed in the context of a significant expansion in Auckland’s retail floor space, driven predominantly by new mall development and enlargement. While some traditional brands have come under pressure, there is increasing demand for international and premium brands.
“Master planned, well managed, high quality properties with a good tenant mix are the current leaders in Auckland retail. The demand for these properties continues to grow compared to rising numbers of retailers vacating poorly managed space with weak pedestrian flows.”
Damian Stephen, Bayleys North Shore Commercial’s retail manager, says strong demand from both investors and owner occupiers is continuing to drive new retail property development on the Shore.
An artist’s impression of the Orchard Park Retail Hub, Albany.
“This is particularly evident in Albany where developers are offering new premises off the plan, either for sale or lease. These are nearly all being snapped up by purchasers - either business buyers intending to occupy them or investors who have sufficient confidence in the strength of the retail market to purchase them vacant and then seek to lease them up.”
Stephen says two good examples of this are the Rosedale Retail Centre on Rosedale Rd and the retail component of the 12-hectare Orchid business park development located between State Highway One and the Albany Expressway.
Bayleys North Shore Commercial has sold and leased many of the units in these developments, which are being undertaken by Northbridge Properties – the developer of Albany’s Interplex Business Park.
All 14 units in the first stage of retail development at Orchard Park, the Corinthian Retail Centre, have been sold and are occupied by a mix of food and beverage businesses and essential service retailers. They range in size from 66sq m to 141sq mand have 54 shared car parks, with only one 85sq unit still available for lease.
Work is now underway on the second stage, the neighbouring Orchard Park Retail Hub, a three-building complex encompassing 16 units totalling 2026sq mwith 94 common car parks. Scheduled for completion late 2016/early 2017, it will be anchored by an Asian supermarket which has leased 445sq m of space.
The units are available for purchase or lease and Stephen says the combination of strong demand for the Corinthian units and an increase in construction costs has resulted in rentals being increased from $450 per sq m to $550 per sq m..
Only four units are still for sale, ranging from 92 per sq m($945,950) to 267 per sq m($2,067,450). The latter has been designed as restaurant space with 84sq m of terracing.. There are 11 units still available for lease from 73sq m..
“Stage One has been very successful in terms of establishing the location as a restaurant and café destination, and with a dozen more units suitable for food and beverage outlets in Stage Two, this whole development is going to be one of the most significant food precincts on the Shore,” says Stephen
He says the retail centres were included in the Orchard Park mix to enhance the amenity value of the location for its business occupants and also to service an expanding surrounding residential population. The Chinese funded $300 million, 800-apartment Rose Garden complex is underway nearby and further large scale residential developments are expected to commence construction in the Albany Centre over the next few years.
Northbridge Properties is also developing the second stage of the Rosedale Retail Centre in the Interplex Business Park after all the 17 units in Stage One, anchored by the 1800sq mTai Ping supermarket, sold with only three left for lease, ranging from 78sq m to 83sq m.
Eddie Zhong, another Bayleys North Shore Commercial retail specialist, says all of the units in the 20-unit second stage of this development, ranging from 65sq to 240sq m, have now been sold off the plans as well, with nine still available for lease.
“The development is ideally located on the fringe of both a very busy business park and close to modern residential housing subdivisions,” Zhong says. “The remaining units available for lease would suit a wide range of food and beverage businesses and service retailers.”
Zhong says many of the purchasers of both the Orchard Park and Rosedale Retail Centre units are local Asians. “They have a strong preference for retail property and like to buy new premises. Some are establishing or expanding their own businesses in the units and others are buying the properties as investments.. While income yields on retail property have tracked interest rates down, they are still offering superior returns to money in the bank. Asians also generally prefer to invest in bricks and mortar rather than equities.”
Ian Little & Damian Stephen, Bayleys North Shore Commercial