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2019 Commercial Property Review - NZ Retail Market

Hoyts EntX Christchurch

Prime retail enjoys steady demand, but there are challenges ahead

This week, Colliers International's Research team is reviewing New Zealand's commercial property market across the key sectors. In this instalment, Research and Communications Director Chris Dibble looks at the retail market.


Overview: Prime space is best in retail and those located off main pedestrian flows or unable to commit capital expenditure to attract consumers are facing challenging times. Overall strip retail vacancy has increased to 4.5 per cent, up from 3.5 per cent a year ago. This is primarily driven by suburban retail rather than CBD retail which remains in strong demand. The retail supply pipeline is the largest it has been this cycle with 180,000sq m of space to be built in the next few years. This is attracting new tenants to the sector, some from offshore, which will assist consumer choice. Rents continue to rise at lower rates relative to long-term averages, with the exception being the new shopping centres under construction and under expansion which are pushing new benchmarks. Average Prime CBD retail yields are at 5.3 per cent, while regional centre yields are 100 basis points softer.

Forecast: The significant addition to supply will alleviate the restriction on possible retail leasing opportunities in some of Auckland’s most desirable retail precincts. However, with this additional supply, the majority coinciding in completion dates, could see a rise in vacancy rates. However, given the quality of the developments and the targeting of the retail mix, rents are unlikely to decrease in response to the extra supply. The lift in quality will flow through into sales activity, but the property will still need to fit a relatively stringent set of purchasing criteria. 


Overview: Wellington's golden mile along Lambton Quay and Willis Street continues to experience steady occupier demand with limited availability in prime spots. Further out from the central city, shopping centre demand is somewhat back on track after the completion of refurbishment programmes and sales activity that has risen modestly. Limited changes in overall leasing activity has meant that gross face CBD prime rents in Wellington increased only slightly, now at $1,318 per square metre, up 1.8 per cent in the past year. Average regional shopping centre rental growth rates remain relatively flat, like average bulk retail rents which have remained flat for almost two years. Average retail yields remained relatively steady albeit a slight softening in average regional centre yields occurred, now at 8.3 per cent.

Forecast: New central retail space, along with existing supply spread throughout the city, will provide tenants with a variety of options to keep demand and supply balanced over the next 12 months. However, prime retail space along the golden mile will remain the most sought after and command the highest rents. Given the more moderate spending from consumers and the influence on retailer profitability given increasing costs and reduced margins, landlords are unlikely to lift rents significantly more than in the past year, instead focusing on capital growth. Demand for high-quality Wellington retail premises will likely see yields start to firm modestly over the next 12 months.


Overview: Positioning itself as the world’s ‘newest’ city, Christchurch is entering a new era as a compact and modern community centre with solid economic growth and consumer confidence that is above the national average. According to information from ChristchurchNZ, within the four avenues there is now a working population of 38,500 and more than 4,300 businesses. With 6,000 residents and a total of 838,000 guest nights, central city foot traffic is reaching an average of 17 pedestrians per minute. There are now more than 300 retailers in the central city including fashion retailers such as H&M, Max, Barkers, Rodd & Gunn, Seed Heritage, Trenery, Witchery, Macpac and more. The opening of new stores has seen inner CBD retail sales year-on-year growth of 15 per cent between 2012 and 2017 increase to 40 per cent between 2017 and 2018, according to Marketview. The recently opened three-level, $50 million Hoyts EntX cinema development (pictured above), which offers 900 seats spread across seven screens, with 13 food outlets signed up, also lifts the central city vibe. Around 700 shared electric scooters from San Francisco-based company Lime have also debuted to keep the city moving.

Forecast: It is all of these supportive factors, along with more leasing opportunities due to the addition of more supply, enabling retailers to commit to new business plans in central Christchurch. Assisting in this decision is the relatively flat rental environment in the central retail precinct, typically ranging between $700/sq m to $1,250/sq m, which is expected to remain broadly similar over the next 12 months.

Read the 2020 series:
2020 Commercial Property Review - New Zealand office market
2020 Commercial Property Review - New Zealand industrial market
2020 Commercial Property Review - New Zealand retail market

Read more from the 2019 series:
2019 Commercial Property Review - New Zealand office market
2019 Commercial Property Review - New Zealand industrial market

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Chris Dibble

National Director | Colliers Partnerships, Research & Communications


Chris Dibble oversees three key business units at Colliers New Zealand - Colliers Partnerships, Research and Communications.

Colliers Partnership priorities focus on support initiatives that drive collaboration, best practice learning, cost efficiencies, and growth opportunities across the wider Colliers franchise network.

As the head of research for Colliers, Chris oversees the collaboration and delivery of award-winning research reports. He is a regular presenter and market commentator, often discussing the latest insights on current and future property trends.

Chris also leads  PR and communications for Colliers. He works with in-house and external writers to curate an audience-focused content delivery strategy. 

With over 15 years of experience and university qualifications in economics, geography, marketing and property, Chris provides a multi-disciplinary approach that assists a broad range of clients and internal stakeholders.

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