KEY POINTS:
Tainui Group Holdings' plan to become a $1 billion company has taken a giant leap forward with plans announced for a 23,000sq m, $100 million shopping mall at The Base retail centre in Te Rapa, Hamilton, scheduled for completion in 2010.
The Base will be the biggest commercial
development in the central North Island and constitutes Tainui Group Holdings' (TGH) flagship retail development on the old air force base at Te Rapa.
When fully developed, The Base will comprise the new mall and a town centre along with existing large-format stores situated on one site and in single ownership. Retail outlets already operating on the site include The Warehouse, Dress-Smart and Mitre 10 Mega.
It is claimed that this will be the country's only "hybrid" (multi-faceted) shopping centre.
The final piece in the development will be a town centre spread over 9ha that includes a health centre, offices and other community facilities.
"We want to fully integrate the town centre with public transport options," says Nathan York, TGH general manager property.
"We are not likely to see a development of this scope and size in Waikato again in our lifetime," says Mark Brunton, Hamilton director, Colliers International, which is leasing the 60-plus shops that will make up the centre, designed by Ignite Architects.
The new mall will be located on the eastern side of The Base and, when completed, take the total net retail floor area of the entire project to more than 72,000sq m.
Late last year, leading retail operator Farmers formalised a lease for an 8000sq m, two-level department store that will anchor the southern end of the new mall. Construction is under way on Farmers' store and six speciality shops that will make up the first stage of The Mall at The Base.
Although TGH is pushing ahead with the mall in a retail environment that bounced from positive to negative at the end of last year, Colliers International has found that tenants are happy to talk about a 2010 opening.
"Most retailers feel there is some pain to go through in the next year," says Brunton. "Many tenants have indicated they will be taking a good look at their business model and, in many cases, freezing capital expenditure on new stores this year. But most have indicated they are happy to budget for capital expenditure during 2010 when a turnaround in consumer spending is expected."
The new mall is primarily aimed at medium to high-end fashion. York says The Base needs more fashion, a department store and specific food and hospitality tenants.
"Along with Farmers having a complete department store range of products, we are talking to a number of major tenants to bind the fashion precinct. A hospitality hub of bars, restaurants, food court and a fresh food precinct will be centred at the northern end of the mall."
Brunton says Colliers International expects to pick up early adopters for the mall development. "For a project such as The Base, there are some icon fashion tenants we are targeting early on. Retail leasing in this economic climate is not easy but we have sent out 40 letters of offer to tenants."
He says while The Base caters for a range of socio-economic groups, TGH wants to lift the bar with the mall and attract high-end customers in particular. "Some of the more substantial tenants have touched on the fact they want upmarket on-site restaurants and cafes to take their clients to."
The new mall will include 550 basement car parks under the entire expanse of the mall and a separate multi-level car park containing a further 250 spaces. They will sit alongside the 1250 parks already on-site.
York says the existing 50,000sq m of large-format retail outlets and cafes on the site have traded well from The Base's opening more than two years ago. "We are confident The Mall at The Base will do equally well and provide a point of difference to other shopping centres in the region through its design and tenant mix."
Ignite Architects has created a traditional "dumb-bell mall", anchored at both ends, but the hospitality precinct and some tenants will externally run alongside the enclosed mall.
The boldest part of the mall's design is along the spine of the roof, where ETFE (ethylene tetrafluoroethylene), a material new to New Zealand, will be used. ETFE was first featured globally in the roof of the Water Cube swimming centre at the Beijing Olympics.
"It has good weight, insulation properties and is translucent," says York.
Brunton and colleague Leon Johnson say The Mall at The Base is a much-needed development in Waikato.
"Hamilton's retail spend is under the national average as is the city's total retail floor area," says Johnson.
Another factor, says Brunton, is that competing shopping centres are landlocked and physically constrained. New sites are not easy to come by and gaining resource consent is often a long and difficult process.
Colliers International has been involved with The Base since the inception of the project in 2003.
"TGH's model reflects an understanding of the need for good partnerships and the desirability of building trusted relationships withservice providers," says Brunton.
He says TGH always had an excellent site for a significant retail development and it was a matter of winning critical mass. "The signing of The Warehouse as the first anchor tenant, and later on forming a joint venture with the company for development of the site, was critical. The Warehouse is still one of the top retail tenants in New Zealand."
The likes of Dress-Smart, Mitre 10 Mega, North Beach and Cotton On were quick to join The Warehouse as major tenants. York says TGH's philosophy was to contract other tenants that were new to the region, as well as signing up generic brands.
"It has been a successful strategy and one we will use for the mall development."
Just over a year ago, The Warehouse sold its half-share in The Base to TGH. York says this gave TGH the opportunity to "pick up the development by the scruff of the neck" and move it forward. "By the time the 29ha site is fully developed, TGH will be sitting on a $250 million to $300 million high-quality asset."
York says The Base trades well and has done since it opened. "The Warehouse's store immediately became one of the company's highest-trading in New Zealand. Across the board retailers have traded strongly from Thursday through to Sunday, and The Mall is likely to back-fill the Monday to Wednesday trading."
Retail development activity is expected to be stagnant in the next year or two, but Brunton says most brands need to grow their networks as shareholders expect growth.
"The noose around retail capital expenditure will have to be loosened sometime and we think it will be sooner rather than later."