Most Hamilton shops occupied
An absence of new shops in Hamilton has helped reduce retail vacancies to historical low levels at 6.8 per cent.
The latest Hamilton Retail and Office Occupancy surveys by CBRE and NAI Harcourts for the six months to December 2017 have been released.
The amount of vacant retail space decreased from 6800 square metres to 5500sqm.
Food retailers dominated the take-up of retail space across several locations, making up 32 per cent of total central business retail stock or 20,100sqm.
Where retail space was vacant, often the building was deemed an earthquake risk or required refurbishment, Mike Neale, managing director of NAI Harcourts said.
More than 10,000sqm was undergoing refurbishment or redevelopment.
Landlords were realising they needed to make changes if they wanted to attract tenants.
‘‘Larger tenancies are often more difficult to re-lease in many instances.’’
Neale said smaller independent niche businesses were taking up tenancies in the CBD.
‘‘They include Electrify NZ, the electric bike provider, E-Juice Bar (vaporiser provider) and Amanda Watson Art Gallery at 260 Victoria St.
‘‘We’re seeing more natural health products. We’ve just leased space to Sunshine Health in Worley Pl, after they relocated from Kmart Shopping Centre.’’
The key to success was variety, Neale said.
‘‘We have Centre Place with its national and international chains and independent boutique businesses in the surrounding external sites.
‘‘The overall retail vacancy rate is the second-lowest on record, and the survey confirms what we’ve seen for the last two years, with this trend likely to continue.’’
Office stock, by contrast, increased by 6950sqm, and the overall vacancy increased to 7 per cent, a 2550sqm increase in vacant space.
‘‘There’s 7000sqm more office space than a year ago and that’s largely due to Genesis consolidating from several smaller sites into one large building on the corner of Tristram and Bryce streets.
‘‘Some of those smaller sites have been back-filled but the remainder are currently vacant.’’
Tenants were moving into higher-grade premises, Neale said.
‘‘For instance, the old Waikato Mowers and Cycles building at 900 Victoria St has been extensively refurbished and split into two tenancies, now occupied by Sharp, and accountancy firm Bruce Sparrow & Associates.’’
Neale said there was also a noticeable increase in demand for shared office space, which was a worldwide trend.
‘‘These are often people who were previously working from home or wanting an initial foothold in Hamilton – SODA Inc runs a shared office at Wintec House as an incubator – and businesses wanting a satellite presence, like Harrison Grierson which has taken a larger tenancy in 678 Victoria St.’’
There was a continued demand and shortage of supply for quality refurbished B Grade office space, and a demand from small office owner-occupiers ‘‘but there are currently no opportunities available where these smaller owneroccupiers can actually own their own small tenancy’’, Neale said.
Although vacancy increases raised concern, the office leasing environment was positive, the survey found.
Top-quality office space had highest occupancy, grade B vacancy was at record lows and had also seen continued positive absorption in 2017, with extensive refurbishment of lower grades.
‘‘These two factors coupled with a buoyant supply pipeline underpin the long-term trend of occupier for higher-quality space, most notably in the cost-effective B Grade category,’’ the survey found.
Vacant space might have increased slightly but was still at near-historic lows, Neale said.
"The overall retail vacancy rate is the second-lowest on record."
Mike Neale, NAI Harcourts