Auckland malls are defying the rise of online shopping, with three retail centres being built or expanding simultaneously in projects worth almost $2 billion.

The new 10-level office tower, rising above Sylvia Park and now almost completed.
The new 10-level office tower, rising above Sylvia Park and now almost completed.

At Commercial Bay in the central city, Precinct Properties is replacing its former waterfront mall with a new shopping centre. Located at the foot of its $941 million PwC Centre, under construction between Quay St, Lower Albert St and Customs St West, that centre is due to open early next year.

Scentre Group project manager, Sean Nash, talks about the Newmarket shopping development.

In Newmarket, Scentre Group is spending $790m rebuilding and expanding its 277 Westfield to create 7.3ha of indoor floor space. The project will bring Auckland's first David Jones, 230 speciality stores, a new Farmers, Countdown and cinemas, all linked via an airbridge over Mortimer Pass. That opens later next year.

And at Mt Wellington, Kiwi Property has the formwork structure up for the $223m expansion of Sylvia Park, creating a new upper-level galleria for an 8100sq m Farmers, expanding carparking to 5000 spaces and almost finishing a new 10-level, $80m office tower for 1000 people. That expanded shopping centre opens in 2020 as Sylvia Park "pops the roof" to move upstairs with its pedestrian-style main-street format mall which is almost 1km long.

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Linda Trainer, Kiwi's new retail general manager, who until two months ago worked at Scentre, says there are good reasons for such a big expansion.

"Bricks and mortar has a great future," she says of physical retail assets, compared with online offerings.

"On a per capita basis, New Zealand has only half the retail floor space of Australia and a quarter of that of the United States," says Trainer. While Kiwi is "interested" in Scentre's plans for Newmarket, she says it is very much focused on the major additions to its regional centre at Mt Wellington, which will have more than 90,000sq m - or 9ha - of indoor floor space once the expansion is completed.

Kiwi is understood to be leasing Sylvia Park retail space for $1500 to $2000 a square metre, though Trainer won't confirm that. At that rate, the 18,000sq m of retail floor space being added could bring in as much as $36m gross annually, with big upside, depending on which tenants Kiwi snares.

Lauren Riley, former Sylvia Park centre manager, says the main centre is 71,954sq m. But when Kiwi Property's Sylvia Park Lifestyle centre across the Mt Wellington Highway is included, the business is trading 88,529sq m of space.

Steelwork for the new structure to house 60 extra shops is now visible from the centre's rooftop carparking deck. An escalator will be built on the ground floor to entice shoppers upstairs, and the Farmers will be on two levels. Soon, the cars will be gone from the rooftop and the shops will be fitted out, ready for a potentially busy 2020 Christmas season.

Scentre Group redevelopment of Westfield, Newmarket. Photo/Michael Craig.
Scentre Group redevelopment of Westfield, Newmarket. Photo/Michael Craig.

Trainer says Sylvia Park already gets 15m shopper visits a year, "which is the equivalent of everyone in Auckland nine times a year or everyone in New Zealand three times. Sylvia Park is such a powerhouse. We have un-met demand."

Kiwi could undertake its expansion while the existing centre continued to operate and visitors were hardly noticing any difference, as the works were in the rooftop area, she says.

The battle of the giant malls is predominantly a Westfield v Kiwi affair, because Precinct's mall is small at less than 20,000sq m. Kiwi has $2.1b of retail assets and in New Zealand, the ASX-listed Scentre has a portfolio value of $2.4b, though it owns only 51 per cent of its five malls. Kiwi has seven malls and two "lifestyle centres" - bulk retail properties.

Plans for the laneway, being built at Precinct's new downtown mall, Commercial Bay.
Plans for the laneway, being built at Precinct's new downtown mall, Commercial Bay.

Trainer says negotiations are under way with many new retailers, including some who have not previously traded in New Zealand. It will be those retailers, rather than Kiwi, which announce their arrival in this country, following new entrants Zara and H&M which have opened their first New Zealand outlets at Sylvia Park.

Since 2009, Sylvia Park sales at 206 outlets have grown by nearly $200m to reach $551m in the year to March 31, 2018, says Trainer. In the past year, Kiwi has opened The Grove dining lane and this year a new 600-space multi-storey carpark will be finished, as well as the new office tower, she says.

Sylvia Park, which opened 11 years ago, has 2800 carparks and is valued at $835m. It is now undergoing a "galleria' expansion to bring in new international and local brands and new concept stores.

Trainer says Kiwi is interested in what Scentre is doing in Newmarket, but Sylvia Park has 1 million people living within a 20-minute drive, a railway station and bus interchange, and big development opportunities with so much land surrounding the existing shopping centre. That land is now carparking.

John Polkinghorne, associate director of retail leasing specialists RCG of Parnell, says: "The current wave of redevelopments is great. It's the biggest we've seen in 10 years and I think it'll be a very busy Christmas when all the expansions are finished. Aucklanders will have access to hundreds of new retailers including a number new to this country.

"Malls have been part of New Zealand for 50 years - Lynnmall was first in 1963 - but they've evolved hugely. They need regular reinvestment to keep them fresh and exciting, and that's happening. One of the key trends is improved food offerings: it's no longer just the food court but casual, smarter dining options, gastrobars and entertainment," says Polkinghorne.