Singaporean investor plans hotel rebrand
Auckland’s retail sector is entering a period of record construction, while spending by Wellingtonians rises modestly to support the sector. Marta Steeman reports.
Auckland shoppers will be spoilt for choice with the record expansion of retail space over the next few years.
Colliers International’s Market Snapshot report said the 179,380 square metres of retail under construction in Auckland ‘‘is the largest it has been this cycle’’.
The 179,380sqm is 17.9 hectares and equates to almost 40 times the area of Auckland’s Aotea Square.
New tenants, including from overseas, were being attracted to Auckland, Colliers said.
Key retail developments under way now include the $790 million redevelopment of Westfield Newmarket, the $233m expansion of the Sylvia Park shopping centre, and the $1 billion Commercial Bay office and retail development on the Auckland waterfront.
Colliers said the increase in shops in Auckland might see a potential rise in vacancies, though there was long-term demand for new space. Many retailers would be faced with steady and moderate rental growth, it said.
Retailers would face competition and higher rents for space in new major retail centres in Auckland. However, the report also showed retail vacancies rose in Queen St, Parnell, Takapuna, Otahuhu, in shopping strips and in shopping centres overall in the year to June 2018.
Queen St vacancies jumped to 4 per cent from less than 1 per cent, while Parnell rose from just over 6 per cent to nearly 8 per cent.
They rose in Newmarket too, to near 6.5 per cent from 2 per cent, where many retailers have relocated because of the redevelopment of Westfield Newmarket.
Average retail face rents (rents inclusive of building costs) in prime areas of the Auckland CBD were static in the year to June 2018. They ranged from $1250 per sqm to $4300/sqm.
Last month real estate firm JLL researcher Daniel Longmire said there had been a slowdown in the number of luxury international brands willing to pay elevated rents in central Auckland.
Rents had been static during 2018, he said, as retailers had become cautious about overextending themselves in the face of rising headwinds, Longmire said.
Apartment dwellers and tourists would continue to be the main drivers of spending along Auckland’s main retail and hospitality strip on Queen St, he said.
Meanwhile in Wellington, retail vacancy rates increased on premier shopping street Lambton Quay from about 3.5 per cent to 4.5 per cent in the year to June 2018, Colliers’ report showed.
However, retail rents on quay rose in spite of this.
Shop vacancies rose slightly in Wellington’s CBD to near 6 per cent and were steady at more than 9 per cent on Courtenay Place, while they fell in Willis St.
Overall, Wellington central’s retail vacancy rate climbed to 6.8 per cent, from just under 6 per cent, over the year.
Colliers said Wellingtonians’ spending had increased modestly and that supported the retail sector. New central shopping space would give tenants a variety of options and keep demand and supply in balance in the capital.
Average Wellington gross face retail rents in the CBD rose slightly to $1318/sqm.
Tenants pay from $1110/sqm to $1500/sqm for prime retail space in the capital’s CBD compared with $700/sqm to $1450/sqm in regional shopping centres.
Colliers said 10,500sqm of retail space was under construction in Wellington. Another 43,000sqm of retail projects was proposed.
During the year the largest retail sale in the region was the North City Shopping Centre in Porirua. It was bought for $100m by Australian investor Angaet Holdings. the
ASingapore-based hotel investor, Naumi Hotels, is about to settle the purchase of the Comfort Hotel Wellington and adjacent Quality Hotel Wellington on Cuba St in the central city.
The two hotels have 177 rooms, and Naumi will renovate and rebrand the properties.
The properties were sold by Rex Nicholls, husband of former Wellington mayor Kerry Prendergast, and Sage Securities, which is owned by Phil McGaveston and four other shareholders.
The price of the deal is confidential, but when Colliers International’s national director of hotels, Dean Humphries, was marketing them last year the asking price was about
$40 million.
Humphries said the hotels fitted within Naumi’s expansion plans for New Zealand given their central location in the capital.
The hotels had their own character, design and artistic flair and would become the ‘‘favoured accommodation provider for millennials, the entertainment and movie industry and young corporates’’.
The Comfort Hotel is a heritage building with a detailed facade built in 1916. Renovations for the 115-room Comfort Hotel will begin after March 2019 with expected completion at the end of that year, for rebranding as Naumi Heritage Wellington.
The Quality Hotel renovations will also be completed at about the same time, and be rebranded as Naumi Suites Wellington with 62 rooms.
Design firm Material Creative is leading the revamp, following its first hotel project designing Naumi’s initial hotel purchase in this country, at Auckland Airport.
That hotel has won design awards, and has been mentioned in Forbes magazine as one of the best airport hotels in the world.
The theme of the hotel refurbishments in Wellington will be ‘‘romantic Edwardian age meets literary bohemian’’, according to a Naumi statement – ‘‘a space that embraces diversity and steadfastly refuses to be boring’’.
Gaurang Jhunjhnuwala, chief executive of Naumi Hotels Australia and New Zealand, said the purchase was part of a strategy to gain a strong foothold in the New Zealand market.
Over the past year Wellington hotel and occupancy declined by 1.5 per cent compared with the previous year.
Auckland occupancy was down 3.7 per cent for the year ending in September 2018.
However, tourist hot spot Queenstown was higher by 2.6 per cent, while Christchurch hotels enjoyed a rise of 1.6 per cent.
There were 3.8 million international visitors in the year ended August 2018, up 3.6 per cent.