War of the malls getting bigger

An Architects' drawing of the Sylvia Park mall in Mt Wellington which opens on Thursday.

As the doors of New Zealand's largest shopping mall swing open on Thursday, rival shopping centre owners are gearing up for a new wave of mall development.

With more than 6ha of indoor space on a 24ha site, Sylvia Park in Mt Wellington is aiming to draw 10 million shopper visits annually, sucking millions of dollars from consumers' wallets.

However, its reign as the country's biggest shopping mall won't last long. Across the Auckland Harbour bridge, international property giant Westfield is excavating for a $130 million, 7ha Albany shopping centre, to be finished by Christmas next year.

Other Australian mall giants are expanding their existing centres, scouting for new land or eyeing up completed malls to buy.

Between them, the battle for a share of the $55 billion spent in shops every year is fierce, but it seems they are united by the one mantra: New Zealanders - shop till you drop.

Those institutions want our mall retail spending to rise from around 15 per cent of total national consumer outlay to nearer Australia's, at 25 per cent, and the United States' at 50 per cent.

And it seems we're on the way.

Research by Retail Consulting Group shows growth in Auckland's shopping centre space outstripped population growth by 19 per cent in the past five years.

Auckland has one shopping centre per 24,298 residents, which puts the ratio of shopping centre space to every person at 0.57 sq m, up from 0.49 sq m in 2000.

Yet we still lag behind Australia, where the average is 0.77 sq m of shops per person, and the developers argue there's room for more as the population keeps growing, transport stays gridlocked and lifestyles demand convenience in where we shop.

Westfield believes there is still plenty more space for malls and having already poured $600 million into its 11 existing New Zealand centres, has another $400 million to spend here in the next five to 10 years.

Justin Lynch, Westfield's deputy director, says a successful formula based on convenient one-stop shopping, expansive carparking, a broad retail offer and a safe, clean, air-conditioned environment sheltered from the weather has seen malls grow in popularity in the past 20 years.

The biggest challenge for the operators is getting the product right and, increasingly, that's not just about offering shops but entertainment and a place to socialise for the whole community - older people during weekdays, younger people at night and families during the weekend, he says.

The 10-plex cinema at Westfield Albany is part of the strategy to offer a family experience and "somewhere for dad and the kids to go while mum's shopping".

Such non-shopping activities and bigger food offerings also help extend the life of the mall and leasing hours. Therefore, providing more entertainment and better public areas will be a company focus for the next five years. With Westfield Pakuranga one of the closest malls to Sylvia Park, Westfield stands to be hurt most by the new centre.

But a recent upgrade that introduced 14 new stores and a new street concept has Lynch confident it will stand up to the competition.

"It will take a hit, but we're fairly confident it will withstand and survive."

Also optimistic of attracting customers is Heart of Auckland City chief executive Alex Swney, who is confident the CBD's aspirational-style destination stores, night-time dining and entertainment will keep money flowing into the inner city.

"You don't find DFS or a High St in a mall and you don't go to malls to have your soul uplifted," he says.

"It would be naive to think [Sylvia Park] is not going to affect everyone somehow but we're emboldened by 140,000 students and corporates who work here every day, and 22,000 CBD residents that weren't here a few years ago."

Others are not so confident. Among its critics is Aucklander Robin Bailey, who opposed Westfield in Newmarket through a lobby group. He believes malls are dangerous, anti-community, monolithic monsters which suck the life out of strip shopping like that in Newmarket.

But Andrew Parsons, associate professor of marketing at Massey University, says that with the city's sprawling populace malls have replaced the city markets of old, taking on a wider social dimension beyond pure goods collection.

Parsons doesn't think Auckland is over-shopped and shopping malls haven't yet reached their zenith.

"We do have a large number of shops per capita but in terms of the way we shop - no - because we tend to like variety in our shopping experience," he says.

"There are plenty of greenfields further out and the population will get there eventually."

That means the battle will continue, as the mall owners attempt to lock out their rivals and block competitors.

Take Sylvia Park as an example. Westfield took Kiwi to the Environment Court, claiming Sylvia Park would ruin their shops and hollow out the town centres of Panmure, Otahuhu and Pakuranga. Ngati Maru threatened to go to the Court of Appeal until a deal was struck.

Kiwi is not the only mall owner that is expanding.

AMP plans to develop in Tauranga and Nelson and Centro is scouting for more opportunities.

"We have $150 million to $180 million to spend on development activity in the next two to three years," says Stephen Costley, general manager of the AMP Property Portfolio.

Costley has an option on west Auckland land and ideas to push the city's boundaries further out to accommodate shoppers' habits.

Westfield is of the same mind but its targets are to the north.

It is also building a specialist fashion retail strip on Nuffield St, Newmarket.

Whether they look north or west, Australian mall owners are united in their view that New Zealanders need more retail therapy.