Stability in the Hamilton CBD market in 2018 has been underpinned by an increase of stock under refurbishment as landlords look to cater for demand according to a new retail occupier survey.
The survey conducted by international real estate services firm CBRE in partnership with NAI Harcourts found CBD retail vacancy rate decreased slightly from 6.3%to 6.2%, from 5,100sqm in June 2018 to 5,000sqm in December 2018.
Total retail stock as at December 2018 was circa 80,000sqm with prime retail space accounting for 37.3% or 29,760 sqm of the total CBD retail stock, secondary stock, 28,900sqm (35%), followed by Tertiary at 22,120sqm(27.8%).
Prime grade experienced an increase in vacancy, moving to 11.1% in December 2018. The largest contributor to this increase was ANZ Bank, which vacated 280 sqm of space at 48-50 Ward Street.
A new Prime take up is at the corner of Bryce and Barton Street, where completion of a new build has seen ASB take up 330sqm of space.
Secondary grade experienced a decrease in vacancy, moving from 4.8% to 4.4%. This grade recorded two new take ups over the six months to December 2018. A large take up is at 231 Victoria Street where a restaurant and Movenpick store have leased space.
Tertiary grade experienced a decrease in vacancy despite there being no take ups of vacant space in this grade.
The change in vacant stock according to the survey is reflective of the volume of stock temporarily withdrawn for refurbishment or redevelopment. The total volume of space under refurbishment in the CBD is around 11,700sqm, which is 200sqm more than in June 2018.
32 occupancies are currently under refurbishment or fitout, the most recent CBD new development activity being at 575 Victoria Street offering two tenancies of 145sqm and 90sqm after the demolition of Domaine Restaurant due to a fire.
In addition, there are four tenancies currently closed for redevelopment, including ex-Kathmandu at 58 Bryce Street and ex-Ronnies Cafe at 335-337 Victoria Street. Three food retailers at 184-188 Victoria Street have closed to make way for a new development which includes progress for the Waikato Regional Theatre that is expected to open in late 2021.
Mike Neale Managing Director–Commercial at NAI Harcourts says the outlook for 2019 is positive and with increasing demand and higher competition in the CBD retail market, tenants are now moving towards quality, small spaces with higher amenities.
“There continues to be a positive trend towards the Hamilton CBD with a significant number of retail tenancies currently under refurbishment or redevelopment. This is not only increasing the quality of stock but also catering for tenants’ demand towards smaller boutique type spaces that are well located.
“The recent development of inner-city apartment buildings, along with the attraction of office occupiers back into the CBD, has seen an increase in retail leasing enquiry, which we expect to see the benefits of during 2019.”
Zoltan Moricz, Head of Research at CBRE New Zealand, says the additional investment into the public realm in the Hamilton CBD in recent years, is also contributing.
“Hamilton’s CBD streetscape is becoming a more attractive and pleasant environment for pedestrians, and this is benefiting retailers, particularly high-quality F&B.
“Small projects such as shared spaces, footpath improvements, street beautification and art have really changed the look and feel of the CBD in the past couple of years, providing a point of difference to traditional mall environments. Future links that will improve access to the riverfront will capitalise on natural amenity and draw more people into the CBD.”
ABOUT THE SURVEY
The survey is based on a store by store analysis of the Hamilton Central Business District and reports on stock levels, vacancy rates, net up take and tenancy mix. In accordance with our definition, retail accommodation within the CBD is defined by street location. In general terms, a store located on a street with good pedestrian traffic and within the central core is categorised as prime, while shops within the core and in close walking distance to high streets are secondary. Those stores located outside the core, or on the fringe are tertiary. This retail vacancy survey is undertaken on a bi-annual basis in a partnership between CBRE New Zealand and NAI Harcourts.
ABOUT CBRE GROUP, INC.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
