Britomart project at vital stage

Peter Cooper (left) and high school friend Jerry Norman at the blessing of Britomart's new lane this week. Photo / Supplied

Gazing up at a grey evening sky from the new Roukai Lane, Peter Cooper wondered about the chance of rain.

On Thursday night the developer of Auckland's biggest urban regeneration project was sitting on a rostrum flanked by Ngati Whatua kaumatua who had blessed the European-style cobbled pathway with its bars, outdoor fireplace and blue fairy lights.

The biggest commercial component of his visionary Britomart project - Westpac's new $140 million buildings - had just been opened.

"Seagulls and the homeless occupied these buildings and this was a very dangerous place. This is just the beginning and we have a long way to go," Cooper told guests at the evening's celebrations, glancing about at the 18 historic buildings which make up the seafront precinct he is part-way through transforming.

The project is now hitting a crucial stage, just as the property market hits the skids.

Funky design retailer Eon has folded, shutting in December, although the space has just been leased to homewares retailer Nood.

Urban Loft is going downmarket, selling Living & Giving ware but the bars have opened and The Barrow has opened a new food outlet in the bottom of Westpac's building.

Cooper is not shying away from the next phase of Britomart. He vowed to begin this year on the former Oriental Markets site where his Cooper and Company is obliged to build carparks for Westpac staff.

That will fulfil resource consent conditions which allowed the new Westpac headquarters in Britomart.

Asked about how the economic downturn has affected his project's fortunes, Cooper admitted some aspects had changed, particularly the large apartment component.

"That's dead," Cooper said of Auckland's poorly performing unit market, a sector flooded with thousands of tiny places selling for a fraction of previous sale prices. He can no longer see any immediate prospect of refitting historic buildings out as funky city living spaces but still retains hopes for apartments in the longer term as part of the Britomart vision. That will bring more people to the area, the lifeblood of any big urban regeneration project.

Britomart's retail components have not run entirely according to plan.

"We lost Eon which we felt really upset about but we've now replaced them with Nood. We don't have any vacancies in shops, although some [tenants are] transitioning to other tenancies. I'm not saying there's no effect from the economic downturn. Tenants are feeling it and having to be creative."

A Colliers International real estate survey out this week found shop owners the most gloomy group of commercial property investors. A resounding 79.7 per cent of retail landlords were pessimistic.

The economic outlook for these investors is particularly poor.

"Increased saving by households in the tougher financial climate is putting downward pressure on consumer spending.

"Given the state of retail sales, especially those categories connected to the household sector such as appliances and furniture where margins are under pressure, it is not surprising that retail property investors are pessimistic about the future outlook," Colliers said.

Confidence in all property sectors had plunged to its lowest level in years.

Cooper acknowledged the office sector's changing fortunes but was quick to dispel rumours that he has ditched plans for office towers in the centre of Britomart.

"Commercial is slowing down but the East building is 85 per cent pre-leased to Westpac and Ernst & Young. We still have space to lease but that building won't be finished for another two years," he says of Hawkins Construction's 13-level job which had this week reached level four.

Six other heritage buildings once destined for the wrecker's ball have already been fully restored including the former chief post office. All are tenanted.

Cooper and Co chief executive Matthew Cockram said seven more had been given sufficient remedial attention to preserve them until full restoration could be completed.

Britomart's proposed new hotel hasn't gone as originally intended.

Cooper's ideas for a bulky establishment, large enough to draw a five-star operator to Quay St, had to be ditched last year amid an outcry, sending executives back to the drawing board.

"We're in the process of engaging with the Urban Design Panel on the height and shape. It will be scaled back," Cooper said.

So what about the dire United States real estate market where Cooper has a large slice of his business, particularly in hard-hit Texas?

Cooper remains upbeat about the new town centre he is developing with American partner Brian Stebbins, citing a big vote of confidence in that project just three months ago.

Forbes magazine found Southlake the most wealthy place in the US with a median household income of US$172,945, heading off even the wealthy New York and San Francisco.

Cooper and Stebbins have been building Southlake Town Square for a decade. The first part opened in March 1999 and has 10 city blocks and 22ha.

Cooper admits to a lack of sales at the exclusive Mountain Landing, his Bay of Islands rural subdivision.

As for Thursday's light rain, the ceremonies were well over by the time the downpour hit. Laneway awnings were quickly wound out to protect city officials, including mayor John Banks and executives celebrating that evening. Luck appears to still be on Cooper's side.

Peter Cooper:

* Te Aupöuri Ngäti Kuri and Te Rarawa.
* Awarded Maori business leader 2008.
* Once a Russell McVeagh partner.
* Ex-executive director Lion Nathan.
* Develops property in the United States.
* Won Britomart tender in 2003.