Why is our CBD bucking the trend of the major centres?- the latest occupancy figures revealed
As I write this article, I have just grabbed a coffee from one of our great CBD establishments and on the front page of the Herald on Sunday it reads:
It’s been interesting to talk to colleagues in Auckland and Wellington, their reality is markedly different to what we are experiencing in Hamilton. Being driven by and heavily reliant on large corporate occupiers and government departments / entities, their growth and stability over the last 10 years, is now facing a very different prospect. When Covid hit and these organisations reacted in a far more conservative way, as compared to the SME’s that drive other centres around the country, a new type of reality hit.
The latest CBD occupancy figures to December 2021 released by CBRE Research in conjunction with NAI Harcourts, shows that the retail vacancy has decreased further in our central city – from 5.8% in June 2021 to 5.6% in December. This is the lowest rate since the survey commenced in 2008.
Overall, the Hamilton CBD retail market has come through the challenges of the second half of 2021 relatively unscathed, with healthy new leasing activity and an encouraging amount of store space being under refurbishment or fit-out. Retail and particularly hospitality bore the brunt of the economic impact of those businesses hardest hit, but with the Orange traffic light setting recently being announced, hopefully they are now in a position to truly see light at the end of what must have at some stages seemed like a never-ending tunnel.
CBD Office occupancy figures show a similar story – over the same 6 month period to December 2021 the overall office vacancy decreased from 8.1% to 7.0%, again this is nearing the lowest since the survey commenced. Substantial redevelopment of poorer grade premises over the last 5 years, along with a significant amount of new redevelopments that are currently under construction or have recently been completed, is in stark contrast to Hamilton of the early 2000’s. New builds currently under construction include ACC on the corner of Tristram and Collingwood Streets, NZ Blood on the corner of Anglesea and London Streets, MSD on the corner of Victoria and Rostrevor Streets, Waikato Regional Theatre at the southern end of Victoria Street, Building E and the multi-level car park building at Union Square on the corner of Anglesea and Hood Streets, having recently secured new leases for 3 office floors.
Flight to quality has been a strong theme amongst office occupiers in the past few years, accentuated by the pandemic, as businesses aim to provide workplace environments that help not only attract and retain talent, but to maintain and improve employee communities and company culture. The results of the last two occupancy surveys in the Hamilton CBD office market shows that the above is not only a global phenomenon, but a trend that is very much experienced within the Hamilton office occupier community.
CBRE Research notes that while hybrid working and more employee flexibility is here to stay, it does not seem to be a major issue in population centres where commuting to and from the office is perhaps less stressful, which together with the city quickly becoming the focal point of the golden triangle economic area, this bodes well for Hamilton.
Undoubtedly Hamilton is going through a major transformation period with a plethora of development under construction across all market segments, residential, commercial, industrial, logistics, as well as arts and recreation.
In the next few months it is expected that Tainui Group Holdings and Kiwi Property will produce a master plan for the wider Centre Place precinct, detailing their vision for the central city site. This will be another important catalyst for yet more growth in the continuing transformation of our CBD, as are the apartments and housing developments that bring people into the area to enjoy the benefits of an increasingly vibrant central city.
While there are undoubtedly challenges ahead, with rising interest rates, supply chain issues, increasing construction costs, staffing shortages and greater difficulty with financing, Hamilton and indeed the Waikato region appears to be in a better position than most, if not all, other regions in the country.
For a full copy of either the Hamilton CBD Office or Retails surveys, or to register to receive future surveys automatically, email hamilton@naiharourts.co.nz or follow us on LinkedIn – NAIHarcourtsHamilton
