Major projects provide optimism for large-format retail

Ongoing large-format retail projects across New Zealand are providing the sector with optimism that a period of growth is on the horizon.

The Maki Centre at Westgate in Auckland, being developed by the New Zealand Retail Property Group, is expected to offer approximately 18,000sq m of floor space, located between Mitre 10 Mega and New Zealand’s only Costco.

The development is set to begin construction and will feature the likes of Baby Bunting, JB HiFi, Supercheap Auto and Hunting & Fishing NZ.

Ikea’s long-awaited arrival will see the furniture retailer opening an approximately 34,000sq m store in Mt Wellington in late 2025. Kiwi Property is looking to develop approximately 6500sq m of additional large-format retail space adjacent to Ikea.

Further down the North Island, Bay of Plenty is home to multiple exciting projects, including another stage of development at Tauranga Crossing that will include Harvey Norman and Beds R Us, while Bay Central Shopping Centre is also set for a 3000sq m extension.

The Sands in Papamoa, a prominent development that has considerable support from Tauranga City Council, has a proposed 26,000sq m large-format retail component that will form part of the wider development.

The South Island also has notable projects, including Nelson Junction, an 11,000sq m centre that has been leased by Colliers and is due for completion early next year. Westwood in Blenheim has also progressed to the final stage with approximately 5000sq m of space due for completion in early 2025.

In Canterbury, consent was granted earlier this year for a 24,000sq m extension to Homebase shopping centre that will include a new supermarket and department store and make it the biggest large-format retail site in Christchurch. Spotlight will open its latest store at the city’s Northwood Supa Centre.

While these projects will provide confidence to the sector, the retail environment has experienced challenges during the past year with inflation putting pressure on consumers against the backdrop of rising mortgage and interest rates impacting disposable incomes.

Despite those challenges, retail spending increased in August by 0.7 per cent compared to July, based on information from Stats NZ which tracks electronic spending data.

Leroy Wolland, national director of largeformat retail at Colliers, says centres with strong fundamentals are continuing to see positive leasing enquiries.

“The development pipeline for large format retail sites across the country remains steady and it is encouraging to see continued demand for space in areas with continued population growth such as West Auckland and Bay of Plenty,” Wolland says.

“Colliers has brokered leases for a handful of new-to-market retailers that will enter New Zealand later this year or early in 2024 and we are excited to watch their expansion. The general market for investment in large-format retail remains strong, as evidenced by the recent sales of Westgate Lifestyle and Remarkables Park Shopping Centre in Queenstown,” he says.