Retail bouncing back in all main centres

Despite headwinds, retail is bouncing back after three years of buffeting by Covid, declining house prices and a now softer economy.

Monday, February 27th 2023

Auckland CBD is rising, bulk retail is bucking the slowing trend in the rest of the market and Wellington and Christchurch continue to perform.

Bulk retail rent growth was up 7.69% in the last quarter of last year and up 13.82% for the year.

Tenants and investor will be looking closely at the individual market segments to make their investment decisions, says JLL latest retail snapshot. 


Auckland’s prime retail rents dropped for the second quarter in a row by 4.2% to $2,300m2  at the end of last year, while incentives to attract tenants remained at 8%.

CBD retail vacancies dropped from 8.6% to 8.2% due to a high level of leasing activity during the last quarter of last year. Several vacancies were taken up at Courthouse Lane, Customs Street East, Elliott Street, and Queen Street.

Partridge Jewellers and SC Luxury are the most recent additions to a rejuvenating Queen Street. With ongoing infrastructure nearing completion in the CBD, luxury retailer demand remains strong. Adding to the impetus is the foot traffic from extra tourists, workers and students are returning to the city.


The CBD had an increase of 3,210m2 of retail space for the last quarter, with the last rise of this size recorded in June 2021.

These were retail components of mixed-use buildings and include 645m2 at IHG Indigo Hotel, 51 Albert Street, 1,970m2 at Barrington,10-18 Customs Street East and 595m2 at 131 Queen St.

Minimal retail space is expected to be added this year, with most of the new space spread across three mixed-use buildings included within Precinct Properties’ Wynyard project, and at 50 Albert Street a block up from Queen St on the old Herald site.

Private, family-owned and financed development company Manson TCLM is developing a 15-storey, 28,873m2 office block for 3,000 workers over 12 office floors with 637m2 of ground floor retail.

In addition, the Horizon Hotel at 101 Hobson Street & 46-48 Nelson Street, which is under construction in the CBD, is expected to have a retail component.

Asset performance

Average net prime CBD yields softened by 25 basis points to 6.63%, with an expectation there will be a further drop of 50 basis points the end the year.

Some of the yields that had minimal tightening over the past few years are not expected to soften considerably. For instance, the lower end of yields for CBD prime are at 8.25%, and they are expected to stay at about this level for the next few years.

No significant transactions were recorded last year. Local investors and developers continue to watch the impacts of both global and local impacts.

However, the pedestrianisation of Queen Street and the $4 billion plus  City Rail Link (CRL) should support longer-term growth for the CBD.

An increasingly mixed-use CBD is being created and the new CRL train stations are expected to bring a wave of development and office development around them. 

Auckland Suburban

Prime suburban rents have remained unchanged at $925m2 since early 2021 and are expected to remain at this level until 2025.

Similarly, no change is expected for secondary suburban rents until 2025 from a current level of $325m2, where they have been since the third quarter of 2020.

Suburban vacancy dropped from 11.9% to 9.4%, signifying more than 5,000m2 of space has been leased. This is spread across multiple locations and shows a lift in demand.

Takapuna’s vacancy fell from 15.4% to 9.3%, with the few vacancies on Hurstmere Road now leased. There are still several vacancies along Lake Road, which are expected to fill up as Takapuna’s rejuvenated town centre nears completion.


There was one mixed-use space completed at 110 Carlton Gore Road in the last quarter of last year. 

New developments under construction include the 6,430m2 large-format retail centre at Sylvia Park by Kiwi Property, next to the 3.2ha site held by IKEA, the Auckland Airport ‘Manawa Bay’ 24,000m2 premium outlet shopping centre, and Lendlease’s 7,060m2 three-level retail development planned between Dress Smart and Onehunga Mall.

All of these developments are expected to be completed by the end of 2025 and are expected to boost Auckland’s retail precincts.

Asset performance

Average net yields for prime suburban and bulk retail softened by 25 basis points, while those for shopping centres softened by 13 basis points.

A significant transaction for this market in the last quarter included the sale of 1,972m2 at  949 New North Road in Mount Albert for $11.2 million. Also 568m2 at 889 Mount Eden Road in Mount Eden was sold during the quarter.

International brands that already have a CBD presence continue to expand into the suburbs. For example, Superdry’s third store opened at Dress Smart Onehunga, with existing stores in the CBD and Sylvia Park. Fitstop is expected to open soon in Albany, as well as in other regions such as Waikato, Christchurch and New Plymouth.


Average gross rents are unchanged for the third consecutive quarter across all retail precincts. This leaves Lambton Quay at $1,800m2 and Willis Street at $925m2.

Wellington’s retail precincts vacancies are declining, especially along the ‘golden mile’ which includes Lambton Quay, Cuba Street, Courtenay Place, Willis Street, and Manners Street.

Overall vacancy in the capital dropped by 90 basis points from 9.1% to 8.2%, boosted by a reduction of 120 basis points for the CBD from 10.1% to 8.9%, mainly across Lambton Quay. The reverse was experienced in the southern CBD where vacancy increased slightly, from 5.1% to 5.7%.


There were several projects completed in the last quarter, with the majority being mixed-use and providing an array of amenities which includes retailing. Developments include the waterfront Bell Gully Building and a new build at 40 Elizabeth Drive Lane with an estimated cost of $35 million that boasts a retail component of 900m2.

Additionally, Event Cinemas has opened its doors in the redeveloped Bloomfield Terrace in Hutt Central.

A notable project in the pipeline is the mixed-use development called Cuba Precinct at Dixon and Victoria Street in Te Aro - a $200-million new build. This is an apartment/office/retail development, with a retail component of 1,080m2 and is due to be completed late this year.

Asset performance

There was one notable transaction for the quarter, the purchase of 31-37 Bay Road, Kilbirnie for $8.5 million. These properties have a combined leasing area of 1,370m2.

Significant transactions for the year remain 19-21 Peterkin Street which was bought by Mitre 10 Wingate for $25.5 million, and the Charter Hall acquisition of 18 Gull Service Stations as part of their Long WALE Convenience Retail Portfolio, with a purchase price of $64.5 million.

Average net yields for prime CBD remain unchanged for the third consecutive quarter at 7.69%, however they are forecast to increase to 7.94% by the end of the year. Average net yields for both secondary CBD and prime suburban also remained unchanged, with secondary CBD at 10% and prime suburban at 9.44%.


Average retail net prime rents have remained at $575m2, unchanged since the third quarter of 2020, after an 11.5% drop at the start of the pandemic. This static trend is expected to remain through the rest of the year.

Vacancies dropped due to more leasing activity in High and Columbo Streets. Several new retail and hospitality outlets across 4,351m2 opened, helping CBD vacancy to decline from 6.6% to 4.9.

On the other hand, suburban retail continues to do well as foot traffic remains high due to employees adopting hybrid working structures. Vacancy in suburban retail dropped from 6.5% to 5.7%, owing to high leasing activity on Moorhouse Avenue during the quarter.


Completions at 12 Oxford Street, 152 Oxford Terrace, 165 Hereford Street, and 158 High Street, along with a few other small properties, added 1,123m2 to retail space to the garden city’s CBD.

There are a number of mixed-use developments under construction with expected delivery dates between now and 2025. For suburban retail, completion is expected this year of two retail buildings with eight outlets at 457 Colombo Street, Sydenham.

For the CBD, 224 Cashel Street, the former IRD building, is expected to be converted into a retail precinct. In addition, apartments blocks at 150 Tuam Street, 209 High Street, and 116 Worcester Street are expected to have retail spaces with a combined retail area of 5,000m2.

Asset performance
Secondary suburban retail is often mixed with office, so the yields of both these asset classes go together. Regardless, average net secondary yields stand at 7.81%. On the other hand, average net prime yields softened by 19 basis points and now stand at 6.56%.

The most significant transaction of the year for Christchurch retail was the sale of Northlands Shopping Centre and 43 Langdons Road for $160 million by Kiwi Property to MP Holdings 5 Ltd, an entity managed by Mackersy Property.

There is ongoing activity in the garden city with Eastgate shopping mall again on the market, last sold in 2022 for $43.45 million, although the centre has been subdivided since this transaction. Before this, the last shopping centre sold was The Palms in Shirley, which went for $88.80 million in 2021.


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