Golden mile losing lustre as shopping evolves
MORE than eight per cent of the Wellington region’s shop space is vacant, Bayleys real estate research has revealed.
It reports a wide disparity in vacancy rates with lower levels in prime locations but the overall rate has risen from 6.5 per cent to 8.2 per cent since 2013.
Bayleys also reported a growing influence of internet shopping, growth in hospitality and service retailers and a decline in traditional retailing.
However, bulk retailing is set to grow with a proposed expansion of Wellington Airport’s retail park in Rongotai and new development in west Petone.
A-grade retail property fared best with a vacancy rate of 5.3 per cent, while vacancies in B and C grade retail properties sat at 9.8 and 10.5 per cent.
The retail mix continues to be dominated by cafes, restaurants and takeaways along with clothing retailers.
Research analyst Ian Little said it was noticeable that service retail occupiers were increasing their share of space.
‘‘Hairdressers and beauty salons are on the increase and becoming quite prolific in main retail centres.’’
There was a strong demand for specialist destination type retail properties but tenants were waiting until properties that met all their requirements came up.
Bayleys reported an unexpected rise in vacancies in the CBD’s Lambton Quay premier retail precinct with the rate rising from 3.7 per cent in 2013 to 12.5 per cent in 2014. The increase was largely the result of earthquake damage and strengthening, and the completion of fit outs which brought premises back into the rental pool.
However, new tenancies are expected to see vacancies falling again to longer term averages.
In nearby Featherston St vacancies in A grade are up near 10 per cent and B grade vacancies are over 16 per cent.
Vacancies in the Cuba precinct rose from 5.3 per cent in 2013 to 6.2 per cent in 2014.
Vacancies in the Courtenay Pl area rose to 26 per cent but this was strongly influenced by the Reading Courtenay Central Cinema where the car park was closed because of earthquake damage.
Courtenay Pl and surrounding streets, which are heavily reliant on bars, restaurants and cafes, saw a large increase in retail vacancies over the past year from 5.1 to 10.8 per cent.
The Willis St precinct fared worse with vacancies now at 12.8 per cent.
Greater Wellington suburban areas showed a modest overall decline with vacancies rates falling from 7.1 to 6.8 per cent.
However, results were mixed with falling vacancy in Lower Hutt and Paraparaumu offsetting small increases in Porirua, Petone, Upper Hutt and Johnsonville.
Lower Hutt experienced the greatest fall in vacancy while in Paraparaumu vacancy declined to just 3.4 per cent, a figure influenced by the completion of the Coastlands upgrade.
Porirua’s vacancy rate climbed to 7.8 per cent, its highest rate in eight years.
Secondary strip retail remained weak in Lower Hutt where retail rents were now below local office rents.
Queensgate’s vacancy rate was just 0.7 per cent but it was up to almost 17 per cent in surrounding streets.
Petone’s Jackson St recorded a low vacancy rate of 4 per cent,
Upper Hutt had a minor increase to over 15 per cent and its mall remained 20 per cent vacant.
Johnsonville remained the region’s strongest tenanted precinct with a 2.6 per cent vacancy rate – with just two vacancies in the shopping centre.
Little said Wellington region business and consumer confidence was relatively upbeat.
New bulk retail developments were in early planning stages. Wellington Airport Retail Park is looking at adding to its bulk retail centre, with The Warehouse, Kathmandu, Bed Bath and Beyond all renewing their leases, leaving no vacancy in the current centre.
‘‘The expansion is planned to contain four to five new bulk retail tenancies totalling 2395 square metres of retail space on the northern end of the current centre.’’
Agents report strong tenant interest and if details were con- firmed, the construction begin this year.
West Petone was also likely to see a significant expansion if its bulk retail offering following as a new zoning is about to become operative.
The Te Puni Mail Centre is set to be converted to a Bunnings hardware store, Briscoes and Rebel Sport stores are set to be built on the old Colgate site and resource consent has been sought for a large new Kmart.
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