Cash is key to reversing New Zealand's empty mall problem

Scentre Group plans to put up to $500m into dressing up its three remaining Auckland malls, including St Lukes.
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Scentre Group plans to put up to $500m into dressing up its three remaining Auckland malls, including St Lukes.

Big-name international brands and flasher surroundings could be the salvation of some of our struggling shopping malls. 

Paul Keane, a director of retail and architecture consultancy, RCG remembers the mass expansion of shopping malls in New Zealand in the 1970s.

He says New Zealand retail is in good shape, benefiting from stronger economy than much of the world and a safe place for our booming tourist numbers.

When retailers start leaving, shoppers tend to follow suit. A scene from Wainuiomata mall.
MAARTEN HOLL/FAIRFAX NZ

When retailers start leaving, shoppers tend to follow suit. A scene from Wainuiomata mall.

But Keane agrees that shopping malls are enjoying "interesting times," with the flagging fortunes of Wellington's Johnsonville and Wainuiomata malls, rapid changes of ownership, and the recent sale of Lower Hutt's Queensgate and Hamilton's Chartwell to Stride Property.

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WHY ARE SOME MALLS STRUGGLING?

Kiwi Property has recently added a $39m cinema and dining complex to LynnMall in west Auckland.

Kiwi Property has recently added a $39m cinema and dining complex to LynnMall in west Auckland.

Well, it depends a little on where you are. In Hamilton, shoppers have been drawn away in droves from the inner city by the bigger, brighter Te Awa-The Base mall on the outskirts. 

Like many centres, people go where there's easy parking and Keane says the council needs to help the CBD woo them back.

"I really think the horse has bolted and it will take a decade to get it back to where it should be."

In Wellington, he thinks the solution is simpler. Most of its regional malls are suffering to varying degrees, and like Hamilton, run the risk that a revitalised CBD and the arrival of David Jones will lure shoppers away.

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However, Keane believes the situation can be salvaged.

"For 20 years people have been mucking around, they haven't done anything."

Johnsonville was once the busiest in the country and still has "a great catchment" but it also has major traffic issues and lain undeveloped.

Reinvestment is also an issue at Wainuiomata mall, which Keane once managed and which he believes could now be "on its knees" due to under-investment.

"You've got to spend money and you've got to spend it on a regular basis ... so you end up with good tenants and a good centre, and the customers react."

Keane says Stride Property, which owns Johnsonville, and has bought Queensgate and Chartwell, needs to take affirmative action.

"Wellington is crying out for a decent retail environment. If I was on the board of Stride, I'd be telling them to have a very hard look at Queensgate, do a major redevelopment, introduce some major tenants, bring in more internationals.

"And also I'd be telling them to do whatever they need to do to get Johnsonville back on track again."

WHAT ABOUT AUCKLAND?

Auckland is doing well, and Keane does not subscribe to the view of some that the city is getting overloaded with stores.

Big money is being spent on doing up many older malls and several have new owners including Takapuna's Shore City, Pakuranga Plaza and Glenfield mall.

Not to be outdone, the bigger malls like Sylvia Park and St Lukes are also being remodelled and bringing in new international names.

In the north, Albany is buzzing thanks to huge residential growth and DNZ's new North-West mall in Westgate is expected to bed in with time.

Keane says traffic still plays a big part in shoppers' decisions, and growing outlying suburbs like Ormiston and Manukau stand to benefit.

AND CHRISTCHURCH?

With the CBD still being repaired, suburban malls in post-earthquake Christchurch are doing well.  

Malls out to the west, such as Hornby and Bush Inn, have benefited from the growing population, and Eastgate, which lost a lot of homes in its area, is being refurbished. 

Tom Barclay, a research analyst at Jones Lang LaSalle in Christchurch, says the shopping precincts being rebuilt in the CBD should be complementary to malls.

"I don't think you'll see your Papanui Rd type retailer or your Riccarton Rd type retail necessarily move into the CBD.

"The challenge, I think, will be getting people back into the CBD. There's been a bit of stigma that Christchurch was dying before the earthquakes retail-wise. That's certainly not the case now. It's going to be a pretty exciting place."

WHAT ARE THE BIGGEST BARRIERS FOR RETAILERS?

Rent is a big one, says Keane. Rent hikes mean retailers need to earn more and in some places like Rotorua and Napier, that's been a tough ask, although even those centres are stable.

The new international brands like TopShop and H&M will spread out but they will drive hard bargains with malls. 

"H&M didn't come to New Zealand just to go to Sylvia Park," he says.

 - Stuff

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