The latest Bayleys Research Wellington Retail survey shows things are on the up for the retail market with increased leasing activity forcing down vacancy rates within the CBD core and lifting rents.
Demand for good quality retail in prime locations such as Lambton Quay and Courtenay Place is strong, strengthening the hand of landlords which has seen robust leases being negotiated, some with 6 year terms and achieving record rents north of $3,000/m2.
Secondary property predictably trails behind premium, with less demand for these properties. Although within the CBD there has been an increase in uptake in secondary graded strips, most notably Featherston Street over the past year, which more than halved its vacancy rate to 7%, there is yet to be a flow through seen in rental rates. While total vacancy for the Wellington Region has stayed stagnant, the core CBD vacancy rate dropped to 7.7%, a fall of 230 basis points from 2014.
Lambton: The largest fall in vacancies was recorded within the Lambton precinct, with the overall rate falling to 4.3% in 2015, down from 12.5% in 2014. The improvement was largely due to a large pick up of property in the secondary strip of Featherston Street...read more.
Courtenay: Countdown also has obtained consent for their plans to develop a store in the Reading Courtenay Central Shopping Centre. This centre has been removed from the survey in 2015 due to numbers of vacancies attributable to the pending development incorrectly skewing the results...read more.
Cuba: A major redevelopment of the old Deka site on the corner of Cuba and Dixon Streets being conducted by Willis Bond and Co is extremely positive for the precinct’s retail future. The project on a footprint of almost 10,000m²2 to complete the joint Whitireia and Weltec Polytechnics arts and creative technology campus, will upon completion, draw a potential 1,000 fulltime students into the Cuba mall...read more.
Willis: Vacancy in the Willis precinct continues to be the highest in the Wellington CBD. The increase of 280 basis points from 2014 to 15.3% in 2015 indicates the shift in retail hot spots and pedestrian flows in the central city retail are following the residential intensification in areas close to Lambton and Cuba precincts...read more.
Greater Wellington Vacancy
Johnsonville: Recording the lowest vacancy rate in Greater Wellington at 3.8%, vacancy in Johnsonville has increased slightly from the 2.6% documented in 2014. The percentage change is however skewed by the small size of the precinct with the increase equating to only an additional three vacancies, two of which were located in the mall...read more.
Lower Hutt: Vacancy rates in Lower Hutt have returned to 2013 levels after falling in 2014 to 6.4%. The current rate of 9.3%, is again due primarily to vacancies located within secondary strip retail locales...read more.
Paraparaumu: This precinct is seeing rapid expansion within its retail sector, driven by development of the airport’s commercial area and in areas benefitting from new road layouts, resulting from the construction of the local expressway...read more.
Petone: Jackson Street strip, classified B grade property has increased its vacancy levels considerably over the past twelve months despite its popularity with cafés, restaurants and takeaways, which form the overwhelming majority of retail offerings in this strip...read more.
Porirua: Porirua precinct once again exemplifies the split between A grade and secondary retail property. North City Plaza continues to be a favoured position for retailers to be sited, with no vacancy recorded in this A grade location...read more.
Upper Hutt: The only Greater Wellington precinct to record a drop in vacancy in 2015, Upper Hutt recorded 12.1%, down from 15.3% in 2014. C grade strip retail remains weak in Upper Hutt, where Main Street vacancy crept up in 2015 to 14.5%...read more.
Tenant Profiles: As retail premises have been categorised by grade within the Bayleys Research survey, so too are tenants, with the class of tenant leading to the strength of the grading...read more.
Retail Property Returns: Reflecting the increased demand for A grade space within Wellington’s primary retail precincts is a lift in total returns generated by investment property over the last year...read more.