The city centre's bouncing back
On Friday 3 March, Heart of the City’s pedestrian counts clocked more than 200,000 people, and yesterday, thanks to the pulling power of great events, came in a close second at 199,000. Aside from New Year’s Eve, this is only the second time this milestone has been hit in three years.
There are many more reasons to be optimistic about the city centre's future, with lots of evidence pointing to a “bounce back”. There are positive trends in both office and retail leasing, new businesses opening with a particular focus on hospitality and late-night offerings, as well as long-term property investment. This will bring more vibrancy, buzz and ultimately more people.
Let’s take a closer look:
More spaces are being leased
Over the December quarter, leasing activity resulted in a drop in city centre retail vacancy rates from 8.6% to 8.2% - and there's also been a number of retail spaces leased in the first quarter of 2023. JLL in their latest retail market property snapshot indicated that luxury occupier demand remains strong and the long-term completion of the City Rail Link should support longer-term positivity for the city centre.
We've seen the evidence of this luxury demand, with new businesses including Partridge Jewellers' two new stores on Queen Street, Nike and SC Luxury as well as Celine opening their new boutique in T Galleria by DFS.
In an interview with The Spinoff, Chris Hart – the owner of Real Groovy – which has recently opened on Victoria Street – said his decision to move was driven by the foot traffic that will come with the opening of the City Rail Link in 2024. He describes its opening as “the way of the future.”
There’s also strong leasing demand for quality commercial office space, with JLL reporting only 5.4% vacancy for premium tenancies in their commercial property snapshot. To support this demand for quality– and the race to net zero for carbon emissions – more offices are being green retrofitted in the city centre, like HB Central and One Queen Street. Proximity to amenities is also important. CBRE Asia Pacific reported that after an award-winning refurbishment of 88 Shortland Street vacancy rates dropped from 30% to 5%, with seven new tenants being attracted to the quality of amenities within the building and proximity to Britomart, Commercial Bay and transport connections.
CBRE's latest research further confirms the demand for premium office spaces in the city centre, reporting an overall increase. It notes that "6-monthly total net absorption in the Auckland CBD office market hasn't been this strong since the second half of 2015".
An increasing number of new hospitality businesses – and the rise of the night-time economy
Dining out is one of the main reasons people love coming to the city centre and this was evident in the December 2022 quarter. It made up 26.9% and 23.7% of domestic and international spend here– as reported in our December quarter insights.
Over the last few months, there’s been a number of new hospitality businesses open - and a number are earmarked to open soon - which will help further strengthen the city centre as a dining destination.
Wahlburgers and Panacea (a late-night bar) both opened their doors last week, adding to recent new openings including Bivacco, BOSSI, Shake Out, Saigon Chill, Moodie Foodie and Machi Machi.
Along with events, hospitality is a key contributor to the late-night economy, which was worth $467M per annum before COVID. There are major opportunities to grow it - even into the small hours of the morning - so we’re thrilled to see several businesses on Elliott Street focusing on late-night dining.
New kid on the block Lao Guangzhou (Guangzhou Hot Pot) in Mid-City is one of the first in the area to open until 2 am (and planned to be 6 am in winter) bringing an international feel to the area. Owner Harry Cai said:
“It’s what people do in Asia - many places are open until dawn and people love to eat late into the night.”
Later in the year, they’ll be joined by a revamped Elliott Stables, which will include a selection of late-night eateries. Paul Wong, who’s behind popular eateries Mr. Hao and Lucky 8 Bar will be an anchor tenant with his new offering Jungle 8, which will follow the “noisy, buzzy style” of Lucky 8.
Our CEO Viv Beck said in an interview with the New Zealand Herald on the new openings in Elliott Street:
“It’s an iconic part of the city centre and its close proximity to the arts precinct makes it an ideal place for late-night dining…there’s some great leasing occurring, and later dining options will give a welcome boost to our night-time economy, especially with more international tourists and students around.”
Ongoing investment and development happening here:
In the New Zealand Herald, JLL highlighted some of the key developments currently underway. There’s billions of dollars worth of new property investment going into Auckland’s city centre. From office blocks, hotels, apartments and shops, we’re excited to see what long-term benefits each of them will bring.
