The Queen St shuffle
Auckland’s CBD is officially the country’s most expensive retail centre, forcing some of the smaller retailers out of their leases.
Colliers estimates that the average net prime rent in Auckland’s CBD retail space is now $2950 per square metre, up 12 per cent on last year.
CBRE estimates that Queen St rents are even higher, about $3667/sqm, 40 per cent higher than a year ago – although CBRE’s estimate likely covers the more expensive end of town.
By comparison, Colliers said, large-format retail rents in suburban Auckland were about a tenth of that, and Wellington CBD rents were up 1.5 per cent to a net $1055/sqm.
Colliers research and consulting director Chris Dibble said population increases were a key driving force.
‘‘Underlying confidence among retailers, driven by better economic conditions, along with competition from investors is pushing up prices with higher rates of rent rises approaching.’’
In Queen St, those bearing the brunt of the increases have been small stores, such as discount outlets, souvenir shops, cafes and dairies.
Ali Reza, manager of the Istanbul Kebab shop, told Fairfax last month that his lease in lower Queen St had been terminated after 15 years.
He believed the new retailer next door was paying around $450,000 a year. ‘‘It’s unbelievable, I don’t know how they will make money.’’
Reza had found another location around Aotea Square but hoped he would return to the busier end of Queen St in time.
Heart of the City, Auckland central’s business association, acknowledged market forces were hard on smaller retailers.
Chief executive Viv Beck said more people were living and working in the city, there was growing demand for space from big retailers, and spaces for smaller shops were limited.
‘‘But what we’re seeing is opportunities in the surrounding streets and lanes. There’s still a need for that different sort of mix that makes up a city but what’s happening is a consequence of Auckland becoming a growing international city and similar to other large cities.’’
Colliers retail leasing associate director Nilesh Patel said the arrival of larger chains had seen ‘‘lower-end’’ retailers forced to find other parts of the city.
‘‘Landlords now have the ability to charge more rent, which in turn will also add more value to their buildings.’’
Patel said the trend had begun post-2011 but had been fuelled by higher tourist numbers as more cruise ships berthed downtown.
More space was on the way, with about 100 retailers to be housed in Precinct Properties, new 18,000sqm PwC Tower.