Auckland retail showing promising signs
Some sectors of Auckland’s retail market are showing signs of growth as the industry continues its recovery following the challenges posed by the Covid-19 pandemic.
Colliers has released its latest research findings on the retail industry for the quarter ending in June. In Auckland, vacancy rates improved in the overall strip retail sector (CBD and suburban), dropping from 11.1 per cent to 10.5 per cent, while CBD strip retail vacancy has improved from 13.7 per cent to 12.4 per cent.
Filip Ograbek, research analyst at Colliers, says while landlords are offering rental incentives and fit-out contributions to attract tenants to premises where vacancy has been persistent, there are signs that face rents have stabilised across locations and sub-sectors.
“Factors such as increased net migration, wage growth, and rising tourist numbers have led to growth in the retail sector with occupiers eyeing an opportunity to secure their desired premises ahead of a shift in the market,” Ograbek says.
“While Auckland's overall retail vacancy rate remained steady at 5.1 per cent as of June, these promising developments in specific sub-sectors could form the basis of further improvements in the market for the coming year.”
The latest numbers from Stats NZ point to a surge in new arrivals to the country with a record net migration gain of 96,200 in the July 2023 year. This population growth will likely lead to further consumer demand that has a positive flow-on for the retail industry.
Nick Pettitt, retail leasing broker at Colliers, says there is positive market sentiment. “Early adopters have taken the past six to 12 months to strategically plan their moves while surveying the market and some have identified now as being the right time to secure a new lease as they look to 2024,” Pettitt says.
“There is interest in central Auckland and some of the popular city fringe locations such as Ponsonby from international and domestic operators and that bodes well for shoppers and visitors to the area.”
Pettitt recently brokered a new lease for international skincare and cosmetics brand Aesop which has agreed to take a prominent site on Ponsonby Rd previously occupied by Icebreaker.
This will add to its footprint in the New Zealand market.
The Fresh Market, a market fruit and vegetable grocer, has taken up a 10-year lease at 205 Queen St and will add to the revitalisation of Auckland’s premier retail strip.
“Market sentiment is certainly improving and from our conversations with prospective tenants, those who are exploring their opportunities are optimistic about the future,” Pettitt says. “Retail spending data from Stats NZ notes a jump in electronic card transactions for August of 0.7 per cent from the previous month, which bodes well as we approach the Christmas period and the retail sector continues to rebuild in a post-Covid environment.”