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News Release

Light at the end of the Tunnel for Newmarket



Long term investment with development potential/new-zealand/en-gb/news/916/long-term-investment-with-development-potentialAUCKLANDLong term investment with development potential
Former Fire Station on high profile corner site/new-zealand/en-gb/news/915/former-fire-station-on-high-profile-corner-siteCHRISTCHURCHFormer Fire Station on high profile corner site

In recent years being a retailer in Auckland has been a struggle. Nowhere has this been more apparent than in Newmarket as retailers in the precinct have been working harder on thin margins in order to both survive and ultimately pay the big rents demanded - some of which equate to the highest suburban rents in the country.

After several years of low levels of activity, increased competition in the form of Sylvia Park and elevated vacancy, the promise of new developments over the next five years is beginning to represent a light at the end of the tunnel.
The retail environment still remains tough.
The NZIER Quarterly Survey of Business Opinion shows merchants, who include retailers, are only mildly positive about the future performance of the sector. A net 18% of respondents are positive about general business conditions whilst only a net 10% of respondents are positive about sales levels.  Although this is an improvement from Q4 2008 where a net -70% of respondents saw conditions deteriorating, current business opinion does not point to a thriving trading environment.

Chris Beasleigh, National Director of Retail Sales and Leasing, says, “We have seen Newmarket sit in the perfect storm over the last couple of years. After becoming a leading retail location over the 1990’s and early 2000’s Newmarket saw retailer confidence weaken and then the on-going uncertainty of new developments being proposed but not delivered. Key amongst these was the 277 expansion, the development of the Newmarket Viaduct and proposed schemes at the ex-Lion Breweries site.”

However, it appears that these developments are now moving much closer to reality. Although the proposed extension of the Westfield Mall, which will sit across Mortimer Pass from the existing 277 is not finalised, retailers are beginning to accept that it will happen even if the time frame is closer to 2017 rather than 2013. This extension that will see the redevelopment of the former Levene Extreme site which is now currently home to a Farmers department store and car parking will helpboost the Southern end of the strip. 
The proposed new Westfield Mall will combine the existing shopping centre at 277 Broadway with a proposed development of 309 Broadway with an additional 95 new shops. A multiplex cinema will be built as part of the expanded mall's entertainment offering. A two-level pedestrian air bridge will span Mortimer Pass, allowing shoppers access from the existing building to the new one.
Auckland University, which has become New Zealand's largest real estate developer, with a $1 billion 10-year order book already well under way, will also be developing along Carlton Gore Road. The university's move will rejuvenate the north eastern end of Newmarket, bringing increased footfall to the area and much needed infrastructural and traffic improvements.
While these additions are in their nascent stages retailers are becoming cautiously optimistic; Pritesh Ishvarlal, Retail Leasing & Sales Broker, says, “These developments are bringing an air of positivity back to Newmarket although there is still uncertainty which has brought softening rents and shorter lease terms.  Over the course of the last year we have worked with brands such as success New Zealand brand I Love Ugly, who can see Newmarket’s potential over the course of the next few years.  (The store has moved in to the new Osborne Street development which features high end fashion and art gallery transforming this corner of Newmarket and helping to attract new tenants to the area.)
“Other deals we have brokered include international brands Sweet Years and Clear Skin Care Clinic who have also moved in to Newmarket and all are opting to take on two to three year leases rather than the traditional nine to ten year lease previously seen.”
Beasleigh concludes, "The development of Auckland University on Carlton Gore Road will certainly provide a ready-made catchment of customers for the retailers of Newmarket. This, alongside the extension of the Westfield Mall will create a sound mix of retail and education quarters as well as providing the opportunity for other facilities such as good quality accommodation and lecture/conference amenities."

Retailers recognise this window of opportunity but there will be some time to wait until this comes to fruition. We are seeing retail sales increasing, although slowly, across the board –according to Statistics New Zealand the total volume of retail sales rose 0.5 percent in the first quarter of this year which followed a strong (1.9 percent) increase in the December 2012 quarter. Retailers are now knuckling down, getting back to business and waiting to ride the next wave of confidence.”