Christchurch Retail Market Snapshot Q1 2019
Christchurch CBD retail vacancy remains elevated in comparison to the Auckland and Wellington markets, however offers a wider range of new built stock for occupiers seeking to enter the market. New supply has continued trickling into the market, underpinning the rise in vacancy despite tenant uptake of a number of spaces. With demand largely satisfied for both food and beverage, and traditional retailing, the market is not expected to see a substantial uplift in new occupier interest over the remainder of 2019.
We have seen refurbishment and new build activity in both the CBD and Suburban markets in Christchurch, meaning a steady stream of space will continue to exit the development pipeline. Refurbishment and expansion activity across malls in decentralised markets continued in 1Q19, with work progressing at the Bush Inn Shopping Centre. The Riverside Market project and the Cashel mall retail complex in the CBD are progressing well, which will add to the growing retail offering in the city. No new large scale projects are expected to commence in the near future, with elevated vacancy rates acting to postpone development activity.
The retail market across New Zealand’s cities is facing a number of headwinds, affecting the ability of landlords to tenant property and occupiers to service rental payments at existing levels. Christchurch’s prime CBD rents remained at 4Q18 levels, ranging from $475 psm to $1,000 psm. Secondary space continues to struggle, a trend which is not expected to improve in the foreseeable future.
CBD yields for prime properties were at 6.50% and secondary at 7.50%, which held firm in 1Q19. Prime and secondary Suburban assets softened to 6.88% and 7.75% respectively.