‘Highest figures since mid-90s’: Shops ditch Auckland CBD

The amount of shop space up for lease in Auckland’s CBD is the highest it has been since the mid-1990s as struggling retailers ditch the city.

The new figures, released exclusively to the Herald on
Sunday as part of our series, the Great Hybrid Return to Work, showed strip retail vacancy rates soared 13 per cent in the two years since before the pandemic.

And the increase – from 1.4 per cent to 14.4 per cent – was recorded by Colliers NZ before the summer holidays and this year’s Covid-19 Omicron outbreak, which further delayed the expected return of some shoppers and office workers to downtown Auckland after last year’s 107-day Delta outbreak lockdown.

Strip retail is when shops are sited next to each other in the traditional town centre style common in New Zealand before malls were invented.

“[The 13 per cent increase] is the highest we’ve recorded in our twice-yearly survey since the mid-1990s,” Colliers head of research Chris Dibble said.

“Again, similar trend to office [vacancy data] though, high quality, well positioned retail as well as malls are outperforming in the CBD.”

Colliers NZ data released yesterday showed vacancy rates of office space in Auckland’s CBD increased from 4.7 per cent in December 2019 to 10.9 per cent in December 2021.

The doubling of office space for lease in central Auckland since before the pandemic signalled an unprecedented change in the way we work, with some big businesses confirming they’ve shrunk traditionally large headquarters so workers can work some or all days from home.

Some major Wellington companies and public service departments have also confirmed the switch to hybrid – some days working at home and some in the office.

Vacancy rates for retail space in Wellington CBD rose from 3.8 per cent in December 2019 to 4.9 per cent in December last year – with a high of 7.8 per cent in December 2020.

For various reasons, such as traditionally fewer tourists and foreign students, Wellington CBD’s retail sector had been “much more resilient” than Auckland’s, Dibble said.

While workers embrace the freedom and flexibility of fewer days travelling from home to office, their vanishing act has been wearing thin for Auckland CBD business owners, already under pressure after two years of border closures also keeping out tourists and foreign students.

Queen St-based jeweller Philip Lin, in business 20 years, was now making a loss and desperate to see people back in central Auckland.

Sales at Queen’s Jewellery are down 60 per cent and he’s started opening only in the afternoon.

“There’s no business here … nobody can make a profit in the city centre.”

But downtown’s loss has been suburbia’s gain – Retail New Zealand said businesses in some suburban centres had seen a rise of up to 15 per cent in sales as workers popped out of their home offices and into cafes for a coffee or to meet clients and use the free Wi-Fi.

New Takapuna cafe owner Macie Stewart was pleasantly surprised when her decision to open a cafe just as the Omicron outbreak peaked in Auckland paid off.

Since Kinship opened on Lake Rd early last month, the 21-year-old had been busier than she could imagine.

Some customers were using the cafe to meet clients, or as a work-space away from the home. Others were working from home and came for their coffee after morning Zoom calls.

“They don’t have the commute so they have time to come in and grab a coffee or have morning tea.”