As Hamilton has moved into Level 2, so does the completion of the latest CBD Retail Occupancy Survey for the 6 months ending June 2021. Just over 12 months ago we thought the world might end, with the demise of bricks and mortar retail – every second shop would be vacant, hospitality would be a disaster and unemployment would go through the roof. How wrong we were!
The latest bi-annual survey conducted between NAI Harcourts and CBRE Research shows:
- surveyed stock totals 77,500sqm of strip retail
- vacant space decreased by 1,970sqm
- 5,670sqm is under redevelopment, being repositioned or seismically strengthened
The real story? The CBD retail vacancy rate decreased from 8.3% in December 2020 to 5.8% in June 2021 – defying all the pundits. “This is the lowest rate since December 2008”
The first half of 2021 showed the Hamilton CBD retail market as stable and recovering, after having been negatively impacted towards the end of 2020. Retail globally is a challenging and fast evolving sector for all economies. Leasing activity in the retail market experienced a significant uplift from occupiers, notably from the service industry who have chosen to either expand their operations or entered the market for the first time. The volume of leasing transactions over this time period reinforces the firm occupier demand for quality retail space, particularly for smaller well-located spaces. During the Level 4 lockdown we received 3 signed lease offers for a small retail tenancy in Alexandra Street – it is rare in any environment for a Landlord to have multiple offers to consider at the same time.
Lease Agreements: it is becoming increasingly common for new lease agreements to be prescriptive in regards to what rent relief may apply, in the event of a government imposed lockdown where a tenant is either not able to access their premises or unable to fully conduct their business from it. With the exception of hospitality, it already appears that there will be fewer requests for rent relief this time, as opposed to 2020 where we had no idea what the economic impact was going to be.
What happened within the retail grades?
- Primary Grade: decreased from 7.4% to 5.8%
- Secondary Grade: decreased from 12.3% to 7.6%
- Tertiary Grade: decreased from 5.4% to 4.0%
Retail Churn, where one tenant took over from another:
- Wise Group took over the OfficeMax lease on the corner of Victoria and Princes Streets
- Fox & Frame took over from Riverlea Gallery at 127 Alexandra Street
- Laree Payne Gallery took over from School Kit at 286 Victoria Street
- Co-operative Bank took over from AMI Insurance on Barton Street
- Chubb took over from NZ Sure at 905 Victoria Street
- Radio Tainui expanded into the adjoining vacant tenancy at 511 Victoria Street
- National retailer Gong Cha moved into Worley Place, adjacent to Starbucks
- The Last Place took over the former De Stylez Studio space at 54 Collingwood Street
- Hair Right Now purchased and moved into 641 Victoria Street
- The Art Studio purchased and moved into 15 Casabella Lane
- The ex Shenanigans has been purchased and will be redeveloped into a restaurant and bar offering
Hamilton CBD continues to be less impacted than its two main neighbours within the golden triangle – Auckland CBD is likely to face ongoing issues through moving in and out of lockdowns, while Tauranga CBD experiences challenges with its roading network and competition from large regional shopping centre, Tauranga Crossing. Although the New Zealand pandemic response has provided an outcome significantly more positive than forecasted, developers and occupiers continue to behave with cautious optimism.
CBRE Research notes that we appear to have seen a shift away from the trend of cost-conscious retailers which was identified in December 2020. Continued intensification of residential development, including apartments and terraced housing, is continuing to bring customers into the central city which further supports new and existing businesses.
For a full copy of the latest CBD Retail Occupancy Survey either:
Linkedin: NAI Harcourts Hamilton