New Zealand Large Format Retail Taking a Turn in 2020
New Zealand’s retail trading conditions have been challenging over the last 18 months.
Household disposable income has decreased due to the lack of confidence in the residential market. Decreasing property values, property not selling or staying on the market for longer, and the auction rate dropping. This meant less spending at retail stores, including Large Format Retail.
However despite this trend Australian retailers including Chemist Warehouse, RSEA and Nick Scali, expanded across the Tasman and opened its first stores in New Zealand.
Confidence in the residential market is improving, and like in Australia, New Zealand is seeing a lag between improved housing sentiment and retail sales.
It is only recently that New Zealand Large Format Retailers indicated that this confidence is resulting in increased sales, especially with homeware, furniture and lighting retailers.
A number of new Large Format Retail precincts are planned to service New Zealand’s increasing population including Westgate Zone 6, three developments in Mount Wellington and two sites in Tauranga, the largest city in the Bay of Plenty region. All are expected to be completed within the next two to three years.
There are also new developments under construction in Napier, Palmerston North, Paraparaumu, and advanced plans for new projects in Timaru, and further expansion to Queenstown Central.
Established Australian Large Format Retailers including Spotlight, Bunnings Warehouse, Animates, and New Zealand’s largest retailer The Warehouse Group, and supermarket chains Woolworths and Foodstuffs all adding to their local store network.
In addition, New Zealand’s Large Format Retail sector is expecting to welcome IKEA and Costco, with Costco making significant progress with its site in Westgate and planning to open in 2021. Exact locations and times have not been released by IKEA.
Unfortunately there is no official recording of vacancies in New Zealand’s Large Format Retail sites, but vacancy levels are generally very low and well below 3%, particularly in A-grade centres and locations across the country.
The immediate future looks very positive for the Large Format Retail market in New Zealand.
With retail sales turning a corner, and exciting new projects emerging, we hope to see a number of new brands entering New Zealand and further expansion existing Australian and New Zealand Large Format Retailers.
By Leroy Wolland, National Director – Retail,
Colliers International New Zealand
