September Quarterly Insights: A mixed bag, with foot traffic up, spend down and business confidence boost
The September quarter has been a mixed bag for the city centre. Our overall foot traffic and spending were down by -9% and -12% respectively. The dip in spend is consistent with national trends for the quarter. Hearteningly, pedestrian counts for the YE September vs. the prior year reveal a +3% increase in foot traffic.
The results for Restaurant Month held in August highlight the benefit of events, with 84% of participating businesses who responded, said the programme “was successful for their business.” A number of new businesses opened their doors and there were some good leasing announcements – including the pending arrival of New Zealand’s first-ever Max Mara on Queen Street. The increase in commercial vacancy rates, at 15.1% by mid-2024 from 14.1% in December 2023 is expected to be short-lived. There is an expectation that “economic and financial conditions improve next year” (JLL), and some major commercial businesses are shifting back into the city centre – Beca and One NZ.
Cuts to the OCR and annual inflation have increased business confidence, some of our significant infrastructure projects are nearing completion and tourism numbers are projected to increase. Each of them offers positive opportunities for the city centre as we head into 2025.
And as we go to press, we’re expecting a bumper weekend thanks to three Coldplay concerts. It’s great to see hotels and accommodation providers full and we expect some good flow on benefits for hospitality and retail, once again demonstrating the benefits of events.
Let's take a closer look at the past quarter.
Overall Spend
Source: Marketview. Not for Reproduction.
The latest data shows just how tough it’s been – and not just for the city centre. Year to date spend in the city centre was -6%, on par with our wider competitor group over the same period. The September year-end results were at 87% (CPI adjusted) of the year ending September 2019 - consistent with the prior quarter (the June year-end was at 88% (CPI adjusted) of the year ending June 2019).
For the quarter, spend was -12% compared to the September 2023 quarter, (with competitors reporting -7%). We expect that some of this can be attributed to the uplift in overall spend experienced in August 2023 due to the FIFA Women’s World Cup which delivered $13.3m of net financial benefit to Auckland.
Source: Marketview. Not for Reproduction.
The overall drop in spending in 2024 can be attributed to less purchases at a lower value. The number of transactions were -5%, and the value of transactions -8%, both vs. STYL.
Who's spending on what?
Source: Marketview. Not for Reproduction.
People residing in ‘Auckland City’ made up the biggest share of spending (39%) followed by ‘International’ customers (18%). Monday to Friday contributed to the biggest share of spending (71%) – as did daytime spending at 69% (6am – 6pm).
Source: Marketview. Not for Reproduction.
With its well-awarded offering, our Cafes and Restaurants sector captured the biggest share of both international and domestic spend, with Restaurant Month popular in August.
Restaurant Month 2024 offered benefits to participating businesses
Sources: Post-event participant survey. Marketview. Not for Reproduction.
One of the highlights of the quarter was one of our signature events, Restaurant Month. It returned for its 14th year in August with over 100 special menus and events.
From walking tours to celebrations of cuisines around the world, there was a strong appetite for the 11 Heart of the City events this year. 90% of all the tickets on offer sold and eight events were sold out.
Credit: Lemongrass Productions.
Businesses recognised the value of participating in the event, with 84% of those surveyed telling us that “Restaurant Month 2024 was successful for their business”. The event also performed well when compared to 2019 with overall spend for participating businesses +6%. However, it was -11% compared to Restaurant Month 2023, reflecting the impact of the cost of living – which has cast a long shadow across the whole quarter.
Foot traffic: How many people were here?
Foot traffic for the year-end September 2024 moved +3% in the right direction, continuing positive year-on-year trends.
Echoing the spending results over the quarter, the number of people in the city centre during the quarter was –9% compared to the STLY.
Source: HOTC Pedestrian Counts. Not for Reproduction.
Overall, Fridays remained the busiest time to be in the city centre, with daytime foot traffic boosted by the busy night, and the start of the weekend.
Leasing news:
Source: CBRE Auckland Figures, Q2, 2024
CBRE reports that overall office vacancy rates in the city centre increased in the first half of 2024, from 14.1% in December 2023, to 15.1% by the end of June; with premium office space vacancy at 3.6%.
JLL’s office results for the September quarter noted that only a small amount of premium-grade space is available, with a marginal increase from the first quarter of the year and two out of five premium buildings in the city centre fully leased.
There is optimism that an increase in vacancy rates is likely to be quite short lived.
The Bank of China took over 4000sqm in Wyndham Street. Fifty Albert Street, now owned by PAG Group officially opened its 32,448sqm space, with tenants already starting to occupy offices. Looking ahead, One New Zealand and Beca will soon return from outside the city centre to their new premises in Wynyard Quarter. This is anticipated to add to “positive prime net absorption” (meaning more high-quality office spaces being leased than vacant over a specific period).
Max Mara will be opening its first New Zealand boutique on Queen Street.
JLL ’s Head of Research Chris Dibble MRICS said in an interview:
"As economic and financial conditions improve next year, as key surveys such as the NZIER’s QSBO and ANZ's business outlook survey illustrate, we expect leasing activity to also improve. The opening of the City Rail Link, and other ongoing CBD improvements, will further underpin office leasing activity.”
CBRE described retail rents in the city centre as “stable” after a downturn in the first quarter of 2024. They reported that “leasing agents are reporting generally improved appetite for space amongst larger retail chains.”
Business Snapshot – openings, awards and milestones
Kemuri Hi-Fi, one of the businesses that opened in the September quarter.
A number of retail and hospitality businesses have opened recently including GOAT, an eatery celebrating modern Indian cuisine on Wyndham Street, and Bowler on Victoria Street West.
On Queen Street, Hallensteins has a new location, while Partridge Jewellers expanded their offering with the TAG Heuer Boutique. Iconic Italian brand Max Mara is also set to open a boutique soon. Stonewood Group’s redevelopment of 280 Queen Street has announced Timezone as its key tenant.
TimeZone at 280 Queen Street is anticipated to open by Christmas 2024.
It was also fantastic to see so many city centre restaurants recognised at the Metro Restaurant Awards 2024: The Grove for Best Fine Dining Restaurant, Cory Campbell for Best Chef, Andrea Martinisi for Best Sommelier, Metita for Best New Restaurant, Michael Meredith for Best Restaurateur (also recognised for his work with Mr. Morris), Hugo’s Bistro’s Poi Eruera for Best Personality, and Gilt Brasserie for Best Wine List. These establishments were among the 17 local eateries named in Metro’s Top 50 Auckland Restaurants for 2024.
Finally, Fingers Contemporary Jewellery celebrated its 50th anniversary in the city centre with a well-attended exhibition.
Looking ahead:
It’s been another tough year, but as 2025 – and beyond – gets closer, there is some evidence that suggests there’s light at the end of the tunnel that will benefit the city centre, including:
Major concerts to bring boosts to hotel occupancy across the region
In August, Tātaki Auckland Unlimited reported that major concerts would boost hotel occupancy from 31st October to 17th November 2024. Pearl Jam fans contributed to high accommodation occupancy across the weekend of their concerts in November, and a boost to foot traffic at the same time (+26% on Sunday 10 November vs the prior week).
Coldplay’s three performances in Eden Park have also been a hit. Domestic flights on the dates of their shows went Up&Up, with bookings +87% compared to the same week in 2023, according to Webjet. Our most recent data showed that hotel occupancy for the city centre will peak at 91% for their Friday, 15 November show.
These events will help attract more people into the city centre in the immediate run-up to Christmas. Bringing more people into the city centre is one of the goals of our 2024/2025 Annual Plan, with activation, events and placemaking being a key aspect of this work. Advocating for a pipeline of major events is part of this.
Source: STR as of 28 October 2024. Not for Reproduction.
International visitors projected to increase
Data from Tātaki suggests that a possible 3.6 million visitors could touch down in New Zealand by the year ending August 2028, with Auckland receiving the largest share. This projection indicates a clear recovery trend in visitor arrivals compared to the 2022 baseline. In this time, significant construction in the city centre will have been completed and operating, including the City Rail Link and NZ International Convention Centre. The opening of both will help further position the city centre as a vibrant, 24/7 international city.
Business confidence hits a decade high
ANZ ’s August survey shows 51% optimism, the highest since May 2014. The New Zealand Herald’s Mood of the Boardroom survey reports senior business leaders’ confidence at 64%, the highest since 2016. The September Quarter 2024 Retail Radar survey indicates 65% of respondents are confident in their business’s survival over the next three months, up from 58% last quarter, with 52% expecting to meet or exceed targets, a significant rise from 32%. As costs ease, we hope consumer confidence will also increase, leading to more spending in the months and year ahead.
A summary of the September Quarterly Insights is available here.
Previous quarterly results are available here.
