- Vacancy rates across Auckland continued their upward trend over the second half of 2020 due, primarily, to movement with the strip retail sector. Overall vacancy reached 4.5% in December up from the 3.3% recorded a year earlier. Overall strip retail vacancies (incl. suburban strips) have increased to a record high of 8.5%, up almost 15,500 sqm compared to the same time last year.
- Development activity within Auckland’s retail sector is currently subdued reflecting the uncertainty caused by the COVID-19 pandemic and changing consumer trends. This backdrop has highlighted the importance of flexibility within retail premises encouraging property owners to refurbish and reposition their assets. Examples being the recently completed projects at 246 Queen / 242 Broadway.
- While CBD retail rents are generally facing downward pressure the opening of Commercial Bay has seen new benchmarks being set at the prime end of the market. Average net face rents across suburban Auckland have declined by approximately 10% over the year to $683 / sqm. Large format rentals however have continued their upward trend with average net face rents ending the year at $363 / sqm.
- While the hospitality sector has been heavily impacted by COVID-19 enforced trading restrictions and border closures experienced investors are looking through the disruption and making strategic purchases of both hospitality businesses and properties occupied by them. Recent examples being Savor Group’s purchase of three restaurant operations in Britomart from Hipgroup for $11M. And the sale of a prominent Viaduct located premises at 204 Quay Street.
- Well located retail premises with strong tenant covenants continue to attract high levels of investor interest. The large format sector’s reputation as a safe haven asset class has been bolstered by a lift in consumer spending for a wide range of goods primarily sold from large format stores. Notable transactions include Argosy Property’s sale of the Albany Lifestyle Centre to property syndication firm Oyster Property for $87.5 million.
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