Internet shopping's power has not hurt NZX-listed Precinct Properties' ambitious plans for its $550 million, 38-level Downtown tower with a vast new lower-level mall in Auckland's CBD.
Scott Pritchard, chief executive of Precinct, which owns $1.6 billion of real estate, said the physical experience of shopping remained a priority formany and he cited this week's strong retail sales data, showing volumes up in the September quarter, partly boosted by strong consumer electronic sales.
After the company's annual meeting yesterday, Pritchard gave further details of the lower-level retail component of the striking waterfront building, indicating rents of up to $4000/sq m might well be achieved in some parts and firmly rejecting online's buying power.
"What we've seen is retail in the central-city location is really growing significantly because it's not just about retail in the sense of going to the store to buy the jeans or a dress. It's actually about the experience and getting a mix that can attract people to the city," he said.
Precinct's plans are to redevelop the entire block bounded by Lower Queen St, Quay St, Lower Albert St and Custom St West.
Three levels of retail and about 100 shops are proposed, including a laneway connecting Lower Albert St through to Lower Queen St.
"Retail rents around the bottom of Queen St are in the $4000 bracket, in the luxury brand shops. We might get that rent but more typically it will be in the $2000/sq m to $3000/sq m range," Pritchard said.
Premium rents were not expected in the mall's upper levels where foot traffic could be lower.
Precinct will commit to the project only when it has reached 50 per cent pre-leasing commitments and Pritchard refused to say what percentage was leased so far. However, he is confident of hitting the target.
"We hope to get there before Christmas. We're talking to a handful of firms, mainly professional services and financial services. We're in negotiations with a small number of occupiers. Two anchors would take a large amount of space.
"This tower will bring an entirely new generation work space to the city so businesses that want to grow and attract the best staff see the opportunity here," he said.
Rents of $500/sq m for office space were already being achieved in the CBD, he said.
Constructions costs were "about three-quarters" of the $550 million, he said, indicating the contract with Fletcher Construction was worth about $412 million.
Pritchard praised Auckland Transport over the negotiations for the City Rail Link, whose tunnels will run beneath Downtown.
"They didn't hold us up at all. You have to work through a lot of detail to build everything we are proposing to build. There's a sea wall north of the site on Quay St."
Pritchard told about 100 shareholders yesterday of progress.
New Downtown Tower image at night. (lit up, in the centre of picture).
"We are really pleased to record several milestones at the Downtown shopping centre. We further advanced the design work and secured resource consent. We signed an agreement with Auckland Transport for work on the City Rail Link and for our development to proceed at the same time," Pritchard said.
He also cited Precinct's controversial deal to buy public land so the building could spread out at ground level opposite the former Central Post Office.
"We conditionally acquired Queen Elizabeth Square and lodged plans for its rezoning. We completed the construction tendering process and have selected Fletcher Construction as our preferred contractor.
"Downtown remains the country's best development opportunity and one that I believe only comes along once in a generation."
Plans for Downtown and the Wynyard Quarter towards Westhaven illustrated the city's direction, Pritchard said.
"Both this development and Wynyard are targeting the increasing interest in waterfront space as the city shifts to a new east-west axis along its shoreline. And for Precinct, of course, the opportunity is especially good as we own the surrounding buildings," he said referring to Precinct's HSBC House at 1 Queen St, PwC Tower and AMP block on the Albert St/Customs St corner.
"This gives us a unique contiguous footprint and unique opportunities to create value.
"Pre-leasing for the office tower remains on track to receive around 50 per cent commitment prior to proceeding with the development," Pritchard said.
