'Site rationalisation' may be on cards for REDgroup
REDgroup could be forced to rationalise or abandon several prime sites in Wellington, property industry experts say.
One leasing agent said the combined annual rent for the Whitcoulls, Borders and Bennetts Lambton Quay stores would be "well above" $2 million.
He understood the Borders site cost about $1.4m per year and the Whitcoulls site just under $1m.
"When Borders purchased Whitcoulls it did seem there was an incredible duplication on Lambton Quay. Even if they can trade out of this I would say they'd have to rationalise the sites."
Jones Lang LaSalle valuations director Mark Spring said finding tenants for the Borders and Whitcoulls Lambton Quay sites, about 2000 and 1800 square metres, respectively, without subdividing them would not be easy.
The Borders store could easily be divided and it, in fact, had been trying to sub-lease superfluous ground floor space for a while.
However, Whitcoulls had a split-level structure that would make subdividing more of a challenge, he said.
Landlords would find the first-floor spaces a harder sell than ground floor real estate.
Westfield would probably have several willing tenants for the Whitcoulls site in its Queensgate Mall, and there would be demand for the Whitcoulls spot in the Readings Cinema complex, Mr Spring said.
"It's got frontage to Courtenay Pl and if they needed to they could chop it up and I'd imagine tenant it reasonably readily."
The Bennetts site at the north end of Lambton Quay, about 200sqm, could take a "little while" to move, "but it's not too big a tenancy so it might not be so bad".
Colliers International Wellington retail leasing specialist Ty Dallas said if REDgroup moved out of Borders on Lambton Quay that site "could lend itself into being carved up into two or more shops".
"Despite the challenging market there's still a strong appetite for retail space on Lambton Quay, particularly from national and Australian fashion retailers."
Research by Colliers International Valuation department in Wellington revealed a vacancy rate of just 1.07 per cent on Lambton Quay.
In the unlikely event REDgroup left all three Lambton Quay sites, which it said comprised 3605sqm, that rate would rise to 8.33 per cent.
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