2012 new zealand retail report


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2012 new zealand retail report

  1. 1. 2012 | colliers international research market report New zealand RETAIL report Waiting for growth While the economic outlook is slowly brightening, some clouds remain over the retail sector, and if retailers aren’t thriving, investors aren’t thriving either. Online shopping is increasing and secondary precincts continue to struggle. On the other hand prime precinct vacancy remains low. In areas experiencing population growth, the resultant increased demand for retail goods will lead to rental increases over time. KEY FINDINGS ƒƒ Overall retail vacancy is 3.4% in Auckland, down development plans will need to be submitted for 12 month 12 month from 5.4% in June 2011. resource consent approval for properties no key indicators change forecast less than 7500m² in aggregate size. ƒƒ Overall retail vacancy in Wellington is 8.6%, OVERALL PERFORMANCE while Dunedin’s vacancy sits at 8.1%, reflecting ƒƒ Prime retail rents across New Zealand have an increase of 2.9% and 3.0% respectively from remained steady over 2012 with the exception new Supply June 2011. of Christchurch, where strong rental growth VACANCY across all earthquake unaffected suburban ƒƒ The Blueprint Master Plan for the Christchurch areas has occurred. central city identifies the location of the 17 major Rents projects and lays down a set of rules for the ƒƒ Large format retailers continue to expand their incentives retail area. In the Central City Retail Precinct, existing premises to meet growing demand. capital values yields What’s Happening In The Economy? CONSUMER CONFIDENCE IMPROVING NEW ZEALAND RETAIL SECTOR New Zealand consumer confidence has rebounded willingness of households to purchase major ECONOMY* from a marginal drop in June, up 6.1 points household items. to 111.9 in the year to September 2012, according By regions, Wellington recorded the highest  GDP   Employment 12% to the latest ANZ-Roy Morgan Consumer improvement in confidence, jumping almost 18 Infometrics 10% Forecast Confidence survey. The overall trend remains points from 105.7 in June 2012 to a region-wide 8% weak as consumers still feel financially worse off high of 118.0 in September 2012. Consumer 6% compared to a year ago, but remain optimistic confidence in Canterbury region increased 4.0Annual % Change 4% 2% about their financial conditions for the year ahead. points to 116.0, while the other regions all 0% The survey further reflects an increased experienced a drop in confidence. Mar-07 Mar-02 Mar-12 Mar-01 Mar-06 Mar-11 Mar-16 Mar-99 Mar-04 Mar-05 Mar-09 Mar-14 Mar-15 Mar-98 Mar-00 Mar-03 Mar-08 Mar-10 Mar-13 -2% -4% -6% -8% RETAIL SALES VALUE UP Source: Infometrics & Colliers International Research The value of seasonally adjusted total retail sales decline was fuel retailing, which dropped by 2.6%. *Seasonally adjusted increased 4.8% in the June 2012 quarter compared Despite fragile sentiment in Australia, the New with the same quarter last year. 11 of the 15 Zealand retail market outlook remains positive, industries surveyed reported an increase in retail with economic growth expected to be steady, sales volumes this quarter. Motor vehicle and parts unemployment expected to reduce and inflation retailing contributed the most, rising by 7.3% likely to be well controlled. compared with the March 2012 quarter. The largest www.colliers.co.nz
  2. 2. MARKET REPORT | 2012 | new zealand retailIn Focus new zealand Retail market indicators Q4 2012 Secondary Net Prime Net Secondary Prime Capital Value Prime Market Secondary Market Precinct Capital Value Rents ($/m²) Rents ($/m²) ($/m²) Yields (%) Yields (%) ($/m²) Auckland shopping AUCKLAND centres CBD 1500 3200 250 750 18,750 64,000 2500 9090 5.00% 8.00% 8.25% 10.00% Colliers International has extended Newmarket 600 1800 275 650 7500 32,725 2750 7880 5.50% 8.00% 8.25% 10.00% its vacancy surveys to cover over Ponsonby Road 500 800 NA NA 6665 13,335 NA NA 6.00% 7.50% NA NA 728,000m2 of shopping centre Parnell 300 900 NA NA 4000 18,000 NA NA 5.00% 7.50% NA NA space throughout Auckland. Dominion Road 200 500 NA NA 2425 8000 NA NA 6.25% 8.25% NA NA Takapuna 450 800 300 450 5805 13,335 3335 5625 6.00% 7.75% 8.00% 9.00% Overall shopping centre vacancy hamilton remains low, 1.5% in June 2012, a CBD 400 750 100 250 4445 8825 950 2780 8.50% 9.00% 9.00% 10.50% fall of 0.6% from June 2011. TAURANGA Four of the five shopping centre CBD 300 450 175 250 4000 6925 1945 3335 6.50% 7.50% 7.50% 9.00% areas experienced a decrease in MT MAUNGANUI vacancy with Eastern Suburbs CBD 350 550 150 250 5385 11,000 1875 3845 5.00% 6.50% 6.50% 8.00% remaining unchanged. Central NAPIER Auckland has the highest vacancy, CBD 450 650 200 450 6000 9285 2500 6000 7.00% 7.50% 7.50% 8.00% 2.2%, while South Auckland HASTINGS records the lowest vacancy, 0.6%. CBD 220 300 160 220 2935 4285 2000 2935 7.00% 7.50% 7.50% 8.00% PALMERSTON NORTH CBD 300 600 150 220 3335 7500 1250 2200 8.00% 9.00% 10.00% 12.00% WELLINGTON Lambton Quay 1675 1925 515 600 24,815 30,800 6865 8275 6.25% 6.75% 7.25% 7.50% Willis Street 740 1105 NA NA 9865 17,000 NA NA 6.50% 7.50% NA NA Courtenay Place 545 720 NA NA 7265 10,665 NA NA 6.75% 7.50% NA NA Cuba Mall 535 840 NA NA 6690 12,445 NA NA 6.75% 8.00% NA NA NELSONAuckland Shopping centres CBD 450 700 250 400 6000 11,665 2940 5335 6.00% 7.50% 7.50% 8.50%vacancy by area QUEENSTOWN   Central Auckland    North Auckland CBD 750 2000 400 700 11,540 36,365 5160 10,370 5.5% 6.5% 6.75% 7.75%   Eastern Suburbs    South Auckland DUNEDIN   Western Suburbs CBD 500 1000 200 450 6060 16,000 2000 5295 6.25% 8.25% 8.50% 10.00% Source: Colliers International Research  Assumes 100-200m2 shop 16.5% Assuming fully leased at market rates 5.5% 44.5% 10.7% INFLATION UNDER CONTROL The consumer price index increased 1.0% in the and services (up 3.4%) counterbalanced by falls year to June 2012, the smallest annual movement in other categories. The Reserve Bank of 22.8% since 1999. The modest increase is mainly New Zealand again held the official cash rate at attributable to higher prices in housing and 2.5% in September 2012 and expects domestic household utilities (up 2.7%), alcoholic beverages economic activity to grow moderately over the nextSource: Colliers International Research and tobacco (up 6.2%) and miscellaneous goods few years. RETAIL PROPERTY RETURNS RISING The latest investment index from the Property comprises 8.1% income return and 2.4% capital Council of New Zealand and Investment Property return. By sectors, retail performed better than Databank (PCNZ/IPD) recorded a total return of office, which is sitting at 7.0%. Retail was also the 10.6% for the retail sector in the year to June only primary sector to record a positive capital 2012, up 6.4% from June 2011. The total return return, 2.4% for the quarter ending June 2012. p. 2 | Colliers International
  3. 3. MARKET REPORT | 2012 | new zealand retailAuckland RetailRENTAL RATES and LEASING ACTIVITYThe retail market has been a surprise stand out in example in the underserviced area of Stoddardterms of performance this year. Australian retailers Road, Mt Roskill and the growth area of Silverdale,trading in New Zealand appear to have performed north of Auckland. Weakness in consumer spendingbetter here than they have back home, helping in the Australian market continues to pose a risk toleasing activity stay positive in Auckland over the New Zealand expansion, with some chains closingpast 12 months. Despite that, rental growth stores in Australia, while others have reallocatedremains elusive and incentives are still playing a resources to open stores in emerging marketspart in lease negotiations, especially in secondary such as China. Westfield Shore Citylocations. Our projection for Auckland anticipates a modest Corner Lake Road and Como Street,Hot spots of high demand are concentrated around increase in prime retail rentals. For the moment, Takapuna, Aucklandprime locations as well in locations where there is still steady demand from New Zealand and Westfield Group and Westfield Retail Trust,significant retail projects are underway, for Australian retail chains for prime retail outlets. the co-owners of the Shore City Mall, have sold the shopping mall to Aviva APPF for $83.5 million.VACANCYOverall vacancy in the Auckland retail market has 3.8% and 6.0% respectively, each declining 0.3%remained virtually constant over the past year, up over the past 12 months.0.5% to 5.0% in June 2012. Close to 27,000m2 of Henderson recorded the highest vacancy, at 7.8%retail space remains empty across the AucklandCBD, Newmarket, Dominion Road, Takapuna, in June 2012. A year ago Dominion Road vacancyPonsonby Road, Parnell and Henderson precincts. reached a record low of 4.5% and has remained relatively flat since then, up 0.3% to 4.8% in theFour of the seven precincts experienced a reduction year to June 2012. Vacancy along Ponsonby Roadin vacancy in the past 12 months. Takapuna in remains tight at 1.9%.particular showed a noticeable improvement,declining to 3.1% after peaking at 5.6% at the end As the economy continues to slowly gatherof June 2011. Vacancy in the larger and higher momentum, we anticipate a reduction in primeprofile areas of Queen Street and Newmarket are retail vacancy in Auckland over the next 12 months. Cider and Vinegar Lane Corner Williamson Avenue and Pollen StreetDEVELOPMENT and SUPPLY Ponsonby, AucklandTwo retail developments along Stoddard Road have street based retail, bulky goods and homemaker Supermarket giant, Progressive Enterprises has announced plans to transform thebeen a welcome addition to the Mt Roskill precinct, retail, and trade-based retail. A staggering 13,609m2 former DYC vinegar factorywhich has been underserviced for many years. 192,000m2 of space will be offered in the centre as site to include a mixture of residential,The activity of supermarkets and general stages become available over the next few years. commercial and retail development.merchandisers has stimulated the development of New life has been given to the 13,609m2 formerthe surrounding retail area. New World recently DYC Vinegar factory site in Ponsonby after itsopened on Stoddard Road and The Warehouse owner, Progressive Enterprises, unveiled plans toand McDonalds are also due to open, along with invest $73 million into a new development. The site AUCKLAND RETAIL VACANCY20 smaller format stores, in a new centre expected will comprise Cider, a new commercial and retail   Jun 2011    Jun 2012to be complete by Q1 2013. 8% development, and a residential precinct known as 7%The Silverdale Centre, an area experiencing rapid Vinegar Lane. The proposed Cider building will 6%population growth, has proved popular feature a 4360m2 Countdown supermarket with 5%among retailers and opened in October 2012. five underground parking levels as well as four 4% 3%The Warehouse will serve as a major anchor levels of office space above the supermarket. 2%tenant in the new centre with 34 other retailers, The remainder of the site will be offered as mixture 1%adding approximately 24,000m2 of retail space. of townhouses, terraced houses and apartments as 0% Queen Street Newmarket CBD Parnell Ponsonby Road Dominion Road Henderson TakapunaOther tenants confirmed include Countdown, part of Vinegar Lane.Noel Leeming and Number One Shoes.NZRPG’s plans for a new metropolitan centre at Source: Colliers International ResearchWestgate includes distinctive precincts for mall and Colliers International | p. 3
  4. 4. MARKET REPORT | 2012 | new zealand retail Wellington Retail RENTAL RATES and LEASING ACTIVITY Public sector job cuts – actual and anticipated – periods to secure tenants in secondary retail space. have weakened confidence in the Wellington Inland Revenue has proposed to impose taxable market over the past 12 months. Retailers are cash incentives on tenants for leases entered into feeling the squeeze on margins and are constrained after 1 April 2013. This new tax policy will in their ability to increase prices in a highly potentially encourage tenants to conclude competitive market. Tenant enquiries in Wellington negotiations for leases that include cash incentive have ramped up over the second half of the year. payments before that date. Colliers International Wellington are experiencing The Mall Rental levels in Wellington retail property have strong enquiry, including interest from Australian 181 Main Street, Upper Hutt, Wellington been flat or declining this year, but they are unlikely retailers, for Lambton Quay premises ranging from Sold to an Auckland property investor to drop any further. The limited prime supply will 80m² to 250m². for just under $20 million. The shopping place upward pressure on rentals over the next centre was put on the market after the The demand gap is widening between prime and 12 months. If the economy picks up more quickly previous owner went into receivership. some secondary locations. Rents are holding up than expected, landlords in these areas will Anchor tenants includes Farmers and remarkably well along the ‘golden mile’, offset by a experience modest rental growth. The Warehouse. softening in some fringe areas. Landlords are having to offer contributions to fit-outs or rent free VACANCY Retail vacancy in Wellington CBD reached a record that, over 94% of retail space along Lambton Quay high of 11.3% in June 2012 with more than 9000m2 is currently leased, and remaining space is of space still available for lease. The increase in expected to be absorbed over the next 12 months. vacant space has been evident since December Willis Street was the only retail precinct to record a 2010 and demand from retailers remains subdued, decline in vacancy, falling by 3.9% to 7.3% in the except in the best locations. year to June 2012. Colliers International monitors over 112,000m2 of We anticipate retail vacancy in Wellington to be retail space, covering 595 shops in the Wellington stable along the ‘golden mile’, but we will see an CBD. Lambton Quay vacancy increased from a low increase in vacancy in some secondary locations. New World Metro Ghuznee Street 1.2% in June 2011 to 5.2% in June 2012. In saying Corner Ghuznee & Leeds Street, Te Aro, Wellington As part of a joint venture with Vicinity, DEVELOPMENT AND SUPPLY Foodstuffs plans to develop a multi storey building which includes a New World Supermarkets tend to do better than discretionary beginning of 2013. The $300 million redevelopment supermarket along with 52 apartments on retailers during recessionary times. The battle for has been on the cards for many years and will add the upper levels. market share between Foodstuffs and Progressive an additional 22,000m2 of retail space to the Enterprises will help trigger the development of existing 10,000m2 footprint, allowing for better 11 new supermarkets across Wellington over the transport integration and additional car parking. next few years. At least two of these projects will RETAIL INVESTOR CONFIDENCE - The improved frequency of commercial flights into be completed by the end of 2012. Foodstuffs’ THREE MAIN CENTRE the Kapiti Coast Airport has been a major boost for New World Metro on Ghuznee Street will offer a Paraparaumu. Recently, Todd Property Group has 60%  Auckland   Wellington new retail concept, delivering a supermarket  Christchurch taken a 75% majority shareholding in the airport 40% with two levels of retail space with dedicated 20% and 83 hectares of surrounding land. New premises sections for homeware, a social kitchen and a food 0% are currently being developed for New World within learning centre. On top of the proposed complex, the Kapiti Landing Business Park. Other retailers Mar-12 Jun-12 Sep-12 Mar-11 Jun-11 Sep-11 Dec-11 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Dec-08-20% there will be 52 residential apartments developed-40% confirmed include Smiths City and Kitchen Things, in conjunction with Vicinity Limited. Construction is-60% which once complete in Q3 2013, will join the expected to begin on the site later this year.-80% existing Mitre 10 Mega.-100% The expansion of DNZ Property Fund’s Johnsonville Source: Colliers International Research Shopping Centre looks set to start as early as the *Net % p. 4 | Colliers International
  5. 5. MARKET REPORT | 2012 | new zealand retailChristchurch Retail In FocusA CHANGING RETAIL LANDSCAPE ONLINE SHOPPING ONSince the first earthquake struck in September unaffected suburban areas. The Hub Hornby THE RISE2010, the retail landscape in Christchurch has shopping centre is undergoing a $40 million Almost two million New Zealanderschanged dramatically. The number and size of expansion to its existing centre to take advantage are expected to make onlinesuburban shopping centres is rapidly growing. of the predicted population growth in the west. purchases this year with totalThose on the west side are benefiting from the This will increase its floor area from 17,000m² expenditure likely to reach $3.19increase in residential growth. Increased leasing to 22,000m². Mitre 10 Mega has just completed billion by the end of 2012.activity has also been noticeable among big box its new 11,000m² store at the rear of its existing According to a new report releasedretailers in locations such as Blenheim Road, site in Hornby, which will be the largest Mitre 10 by Frost & Sullivan and PwC,Riccarton and Hornby. Due to a lack of supply, Mega in Christchurch. online spending is expected to risethere has been strong rental growth across all to $5.37 billion by 2016 with a compound annual growth rate of 14.3%. The research also foundTHE NEW CENTRAL CITY PRECINCT 35% of online expenditure wasThe Christchurch Central Development Unit that 7500m² area limit. This could see three major going overseas.(CCDU) released its Blueprint Master Plan for the 7500m² development plans in each of the three Lower prices, improved searchcentral city in late July 2012 identifying the location larger city blocks. engines, price comparison sitesof 17 major projects and laying down a set of rules As yet no master plans have been submitted to the and rising penetration offor the retail area. The Central City Retail Precinct CCDU / Christchurch City Council for approval. smartphones are the key drivershas been compressed to an area bounded by The CCDU does have the power to compulsorily for the growth of online shopping.Hereford Street to the north, Lichfield Street to the acquire individual lots where such a development The top three online purchases,South, Oxford Terrace and the Avon River to the plan has an incompatible or uncooperative owner by a significant margin, wereWest and High Street to the east. of a smaller site in the middle of it. However, CCDU electrical items, clothing andIn each of the four retail blocks, development plans has said it would only use these powers as a last books.will need to be submitted for resource consent resort and is endeavouring to get adjoining owners In New Zealand, online purchasesapproval for properties no less than 7500m² in together to hold what it refers to as “block now make up an estimated 5.9%aggregate size. These can be separately owned meetings” to facilitate the development of approved of total retail sales. However,lots and developed individually but must fit into an master plans. compared with other developedagreed master plan which all the owners within countries, online shopping remains a little less popular in New Zealand with Australia sitting on 6.3%, theDunedin Retail US 7.3% and the UK 10.7%.Retail leasing activity in Dunedin has been stable between 6.25% and 8.25%, while secondary yieldsover the past 12 months. Owing to strong demand have softened due to the costs of earthquakefor prime retail space and a shortage of supply of strengthening and increasing insurance premiums.good quality stock, prime CBD rentals have Overall retail vacancy increased slightly, sitting at Online expenditure as aincreased modestly. In comparison, rentals for 8.1% in June 2012. With a lack of new stock percentage of retail salessecondary space have eased, with incentives such available in the Dunedin CBD, we expect vacancy  2011   2012as rent free holidays being offered to attract 12% rates to remain low in the near future.tenants. Prime retail yields have tightened to 10% 8% 6%Hamilton Retail 4% 2% 0%Suburban shopping centres, such as Te Awa and announced the expansion of this site, a new New Australia United UnitedThe Base continue to draw shoppers away from 3000m² automotive precinct with construction to Zealand States Kingdomthe CBD shopping areas, pressuring landlords in begin at the end of this year. Westfield’s Centre Source: Frost & Sullivan, PwC and Colliers International Researchthe CBD to drop rentals and offer more competitive Place shopping centre is undertaking a furtherincentive packages to retain or attract tenants. redevelopment to expand its retail floor space toThis has been driving vacancy levels up in the CBD. 26,000m² comprising over 110 speciality stores.Following a successful retail expansion at Over the next 12 months, we expect yields toThe Base, Tainui Group Holdings has recently remain strong and rentals to remain steady. Colliers International | p. 5
  6. 6. MARKET REPORT | 2012 | new zealand retail Tauranga/Mt Maunganui Retail Retail businesses in Tauranga reported largely flat and abundant car parking for customers and sales over the past 12 months while Paymark competitive lease incentives, especially discounted figures showed the Bay of Plenty region rentals, that are offered to tenants. The consequent experienced a 3% increase in electronic retail reduction in demand for Tauranga CBD retail spending. Yields for retail properties in both property this year has caused a significant increase Tauranga and Mt Maunganui have remained stable in vacancy in the main shopping strip. There has and are expected to firm in the near future. been a shift in tenants moving out of older buildings in the CBD. Over the past year we have seen growing interest from tenants in the suburban retail centres of Overall rentals are anticipated to remain steady in308 Barton Street, Tauranga and Mt Maunganui, primarily due to free the next 12 months.HamiltonAugusta Funds Management has acquired308 Barton Street from a private owner Hawke’s Bay Retailfor $5.1 million. The 1489m2 retailpremises comprises rooftop carparkingand is currently tenanted by JB Hi-Fi. Napier and Hastings continue to attract interest built in 2013. The Park is proposed to provide from large national retailers wishing to have a 25,000m² of retail space and over 700 car parks. greater presence. Major retail developments in the Top tier retail locations have experienced a modest region include the new 6000m² Farmers lift in rental incomes, while the demand for department store on the corner of Heretaunga and secondary space has been weak. King St in Hastings which opened in late July 2012. Investment activity has been strong in the past 12 Farmers will also open a new 5500m² store on months, with the sale of the Warehouse and Kmart Hastings Street in Napier in early 2013. in Hastings in excess of $14 million and $18 million Hastings’ The Park Megacentre, anchored by The respectively. We expect momentum to continue Warehouse and Mitre 10 Mega, is now 80% and prime yields to remain solid over the next year. complete with the remaining bulk retail units to beKmart - The PlazaCorner St Aubyn Street & Karamu Road,Hastings Palmerston North RetailIn one of the largest sales in Hawke’s Bay, The volume of retail leasing deals has been low in On the supply side, Progressive Enterprises hasthe Kmart Plaza in Hastings was sold Palmerston North over the past 12 months. recently opened a new 3200m2 Countdown storeby Sandhurst Trustees to an Auckland in Kelvin Grove. On the investment side, the However a lack of quality stock in the CBD hasinvestor for $18.5 million. meant that prime retail vacancy remained low. Noel Leeming store on Rangitikei Street was sold In the secondary market, we have noticed to a local investor for $5.6 million in June 2012. an increase in vacancy, particularly in earthquake- Overall we expect the Palmerston North retail prone buildings. market will continue to be stable for the next year. Nelson Retail Retail vacancy remained low in the CBD. Leasing In the CBD, the demand for large format retail activity began to slow in Q4 2011 but due to the stores remains stable with Hunting & Fishing steady demand from national retailers and a having opened a new store at 50 Achilles Avenue limited vacancy in the CBD, prime rentals have in the middle of 2012. The new 1150m² store is the experienced a moderate increase and returned to second largest H&F store in New Zealand.Remarkables Park Town Centre ExtensionFrankton, Queenstown pre-recession levels. With no major retail Although the volume of retail investment sales has developments coming up, we anticipate prime been low in the first half of 2012, prime yieldsRemarkables Park Town Centre is rentals and vacancies will be stable over the next remain robust and are now sitting between 6.5%undergoing a major expansion whichwill create an additional 34,000m² of 12 months. and 7.5%.retail space. p. 6 | Colliers International
  7. 7. MARKET REPORT | 2012 | new zealand retailQueenstown RetailWith tenant demand continuing to outstrip supply retail growth opportunities with some majorin the CBD, prime retail rentals remain strong. developments proposed in the area. RedwoodVacancy remains low with evidence of significant Group has recently obtained resource consent forkey money being paid to secure prime locations. its $120 million Five Mile Retail Centre developmentIn secondary areas, there has been a large take up near the airport. Stage One will incorporateof retail space over the past 12 months, driven by 24,000m² of retail space to be anchored by aincentives, such as discounted rentals or extended 4200m² Countdown supermarket with constructionrent free periods to attract new tenants. Rentals work due to begin in late 2012.are expected to grow over the next 12 months. In addition, the next stage of expansion ofInvestment yields remain strong with few Remarkables Park Town Centre will enable the The Warehousetransactions. Prime yields are now sitting between centre to accommodate up to five large format Snells Beach, Palmerston North,5.5% and 6.5%. stores ranging in size from 1500m² to 6000m² and Queenstown over 1000 new car parks. Three retail stores owned by The WarehouseOutside central Queenstown, Frankton Flats has been sold to separate local investors incontinues to provide the majority of Queenstown’s excess of $28 million in total. They will be leased back to The Warehouse for 10 year terms with rights of renewal.Investment ActivityBoth by volume and value, New Zealand retail An Auckland-based retail investor has seen theproperty sales over $2 million declined 45% in potential of Upper Hutt’s The Mall shopping centre NEW ZEALAND RETAIL PROPERTY2011, after reaching a three year high in 2010. and purchased it for just under $20 million through SALES - OVER $2 MILLIONThe total sales volume under $2 million in 2011 a mortgagee sale in July.   Sales - First Half    Sales - Second Halfwas nearly half of the peak in 2007.   Number of Sales Nationwide, the appetite for large format retail 1000 160In Auckland, the most notable transactions so far investments appears to be continuing with The Value of Sales $(millions) 900 140this year are the sales of the two Westfield shopping Warehouse concluding sales of its stores in Snells 800 Number of Sales 120 700centres, in Takapuna and Auckland CBD. Beach, Palmerston North and Queenstown. 600 100The former Westfield Shore City mall in Takapuna Investors will remain cautious towards investment 500 80 400 60was sold to Aviva Investors Asia Pacific Property opportunities in Christchurch until there is more 300 40Fund for $83.5 million in July. More recently, evidence of activity. 200 100 20Precinct Properties New Zealand (formerly AMP 0 Overall we expect the performance of retail 0NZ Office) acquired the Westfield Downtown 2007 2002 Jul-12 2006 2001 2011 2004 2005 1999 2009 2000 2003 2010 1998 2008 property investment to improve somewhat withShopping Centre for $90 million representing an yields tightening marginally over the next year.initial yield of 7.6%. This is the biggest retail Source: Property IQ & Colliers International Researchproperty transaction in the Auckland market sinceAugust 2011. RETAIL SALES ACTIVITY (over $10 million) Address Precinct Sale Date Sale Price ($) Vendor Purchaser AUCKLAND NEW ZEALAND RETAIL PROPERTY Westfield Downtown, CBD Sep-12 90,000,000 Westfield Group / Precinct Properties NZ SALES - UNDER $2 MILLION 11-19 Customs Street East Westfield Retail Trust (Formerly AMP NZ Office)   Sales - First Half    Sales - Second Half Westfield Shore City, Takapuna Jul-12 83,500,000 Westfield Group / Aviva Investors   Number of Sales Corner Lake Road & Como Street Westfield Retail Trust Asia Pacific Property Fund 900 2500 Value of Sales $(millions) The Warehouse* Snells Beach, Various Sep-12 Over Eldamos Investments Various Investors 800 Palmerston North, Queenstown 28,000,000 700 2000 Number of Sales 600 Bunnings, Mt Mar-12 24,500,000 Bunnings New DNZ Property Fund 1500 500 2 Carr Road Roskill Zealand 400 1000 HAWKE’S BAY 300 200 500 Kmart - The Plaza, Hastings Oct-11 18,500,000 Sandhurst Trustees Private Investor 100 Corner Aubyn Street & Karamu Rd 0 0 2007 2002 Jun-12 2006 2001 2011 2004 2005 1999 2009 2000 2003 2010 1998 2008 WELLINGTON The Mall, Upper Sep-12 Circa Mortgagee of Andrew Budge Source: Property IQ & Colliers International Research 181 Main Street Hutt 20,000,000 Trentham City InvestmentsSource: Colliers International Research *Three separate transactions Colliers International | p. 7
  8. 8. MARKET REPORT | 2012 | new zealand RETAIL RETAIL DEVELOPMENT UPDATE (over 10,000m2) Address Precinct NLA (m2) Status Estimated Completion Owner/Developer 522 offices in AUCKLAND 62 countries on Apex Mega Centre, Mt Wellington Highway Sylvia Park 16,000 Complete Q4 2011 Redwood Group 6 continents The Silverdale Centre, Silverdale 24,000 Under Q4 2012 The Warehouse United States: 147 Hibiscus Coast Highway Construction Canada: 37 22 Stoddard Road Mt Roskill ~10,000 Under Q1 2013 Graphite Management Latin America: 19 Construction Asia Pacific: 201 Westgate Town Centre - Stage 1 Massey 123,000 Proposed Q4 2014 NZRPG EMEA: 118 HAWKE’S BAY  $2.35 billion in annual revenue The Park Mega Centre, Hastings 25,000 Part Complete 2013+ Charter Hall Group million square feet under  381 Karamu Road North management PALMERSTON NORTH  Over 12,300 professionals and staff 250- 256 Featherston Street Palmerston 12,000 Complete Q4 2011 Carrus Corporation North WELLINGTON Kapiti Landing Business Park Paraparaumu ~10,000 Part Complete Q3 2013 Todd Property Group Colliers International has Johnsonville Mall Redevelopment, Johnsonville 22,000 Consented TBC DNZ Property Group complete market coverage 16 Broderick Road in New Zealand CHRISTCHURCH AUCKLAND 09 358 1888 Mitre 10 Mega Expansion, Hornby 11,000 Completed Q4 2012 Hornby Mega Main South Road NORTH SHORE 09 488 4777 200-220 Moorhouse Avenue Addington 10,250 Under Q4 2012 Power Centre SOUTH AUCKLAND 09 359 7915 Construction Moorhouse and 218 Moorhouse HAMILTON 07 839 2538 The Hub Hornby Expansion Hornby 22,000 Under Q1 2015 SCI TAURANGA 07 571 4125 Construction HAWKES BAY 06 834 0599 QUEENSTOWN PALMERSTON NORTH 06 354 7080 Remarkables Park Town Centre Frankton 27,000 Consented 2013+ Porter Group Extension - Part 2 WELLINGTON 04 473 4413 Shotover Park Expansion Frankton 12,500 Consented 2013+ Shotover Park NELSON 03 545 6920 (on appeal) CHRISTCHURCH 03 365 7887 Five Mile Retail Centre - Stage 1 Frankton 24,000 Consented TBC Redwood Group QUEENSTOWN 03 441 0790Source: Colliers International Research DUNEDIN 03 474 0571Outlook FOR MORE INFORMATION CONTACTRetail spending is showing some signs of growth, happen we need population growth and/or Colliers Internationaldevelopments are being planned and built, and income per capita growth. Auckland andvacancy levels in the best shopping precincts are Christchurch are the locations where these Alan McMahonstable or falling. But any talk of recovery has to conditions exist and where in the medium term National Director Researchbe tempered with a degree of caution – as it will retail spending will increase sufficiently to warrant and Consultingbe patchy. rent increases. Nina Zhang Research AnalystMost of the centres featured in this report expect These sentiments are reflected in our latest Leo Leestable rents and values. That is better than the investor confidence survey. Optimistic Christchurch Research Analystgenerally declining picture of the past two to three and Auckland retail investors outnumber theyears, but not encouraging enough to trigger pessimists, although only by a small margin in Level 27, SAP Tower 151 Queen Streetnew retail supply around the country. For that to Auckland’s case. Auckland Tel 09 358 1888 Fax 09 358 1999Colliers International Research and Consulting www.colliers.co.nzOffers a Range of Property Solutions:ƒƒ Property Investment Strategies ƒƒ Market Analysis and Forecastsƒƒ Demand Studies ƒƒ Feasibility Analysisƒƒ Development Management ƒƒ Project Managementƒƒ Make Good/Dilapidations ƒƒ Building ConsultancyWhilst all care has been taken to provide reasonably accurate information within this report, Colliers International cannot guarantee the validity ofall data and information utilised in preparing this research. Accordingly Colliers International New Zealand Ltd, do not make any representation of Accelerating success.warranty, expressed or implied, as to the accuracy or completeness of the content contained herein and no legal liability is to be assumed or impliedwith respect thereto. © All content is Copyright Colliers International New Zealand Ltd 2012 and may not be reproduced without expressed permission.www.colliers.co.nz