Property editor of the NZ Herald

Monster $500 million expansion for malls

An artist's impression of the expanded Westfield St Lukes mall. Photo / Supplied
An artist's impression of the expanded Westfield St Lukes mall. Photo / Supplied

Australasia's largest shopping centre owner and manager plans to spend over $500 million expanding three Auckland malls and bringing new international retailers here, an executive says.

Peter Allen, Sydney-based chief executive of Scentre Group which owns and manages the 977-shop $1.3 billion Westfield-branded malls throughout New Zealand, told the Herald he expected the first redevelopment before this year's end.

On plans for Newmarket's 277, St Lukes and Albany, Allen said: "It will be over $500 million."

Although the owner/manager has for many years held ambitions to redevelop the malls in wealthy city areas, Allen indicated the programme would now begin due to New Zealand's strong economy.

Shoppers at Westfield St Lukes shopping mall. Photo / Chris Gorman
Shoppers at Westfield St Lukes shopping mall. Photo / Chris Gorman

"The operational performance has been extremely strong in the last 12 months. We've had [New Zealand] sales up 6.6 per cent in the year to December 2015.

We're certainly seeing demand by retailers for quality product. With development opportunities at Albany, St Lukes and Newmarket that will bring in additional retailers which will strengthen the shopping centre product.

"In terms of the timing, we've been working on Newmarket for a number of years and were very close prior to the GFC to pulling the trigger," he said.

This was deferred and the area has been used for car parking since.

"We have a plan we're finalising. We're hoping to be in a position where by the end of this year, we'll be able to commence. It will be a new Farmers, new cinemas in terms of entertainment and a number of other international retailers we have negotiations with. I'm not going to say who.

"A number of new retailers have already opened stores and when you look at Newmarket, it's something we believe is the right location for new international retailers," Allen said.

Scentre would spend "in the range of $150 million to $200 million, maybe a bit more, given we already own the site and what we can do there.

"We have to finalise our approvals with the council and make sure feasibility works and we can get board approval and we have enough retail demand.

"We've got agreements at St Lukes and Albany for expansion. We will have to make some changes to council consents as we refine our plans. That will be after the Newmarket development. Expansion is very dependent on demand by retailers," he said, adding that St Lukes would be developed before Albany.

"Probably a year to 18 months after the commencement of Newmarket would be St Lukes. At Albany, it's dependant on the market needs. If we see a key opportunity that we need to develop both at the same time, we'd have to evaluate whether it's right to expand our construction team."

Scentre owns the malls with a Singaporean government investment fund and was committed to New Zealand.

"We want to maintain our market position in New Zealand. We've disposed of centres there which is similar to what we've done in Australia. By selling those centres, we've been able to redirect the proceeds of those sales back into the development pipeline. We'll be able to retain a very strong position in the NZ market as the owner and manager of the premier shopping centres."

Population and wage growth was flowing through to sales: "Generally, the economy of New Zealand is probably a little bit stronger than the Australian economy at this time."

On neighbourhood concerns about St Lukes' expansion, Allen said: "What we have to do is make sure that the centres are integral to the community and respect people's views with traffic and noise. We're working with the authorities and community to ensure we can meet the needs of that community."

Justin Lynch ran Scentre's operations for many years from headquarters above 277 and Allen said Linda Trainer was now in charge.

- NZ Herald

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