Occupancy rates in retail at 10 year low

Napier retail occupancy rates are at the lowest level in 10 years, the August Logan Stone Retail Occupancy Survey reveals, while the rest of the the Hawke's Bay retail market remains static.

The lower 90.2 per cent occupancy rate has been largely attributed to NZ Post's relocation from its Hastings St premises and the near-empty Mid City Plaza.

The low rate was in contrast to February's survey which cited: "Napier's defiance of the pessimism within the retail sector, with occupancy levels increasing."

The August report said the earthquake rating (seismic status) of buildings was of growing significance in the property market.

"This concern is resulting in relocations where a building does not meet the seismic strength requirements of a tenant," the report said.

"In some cases the tenants' requirements are greater than the current legal requirement, which is proving difficult for some owners.

"For a number of tenants the remaining lease term has not stalled their desire to move, although they continue to meet their rental obligations. We expect this trend will continue, especially with national tenants, and will increase demand for new building stock and may lead to the obsolescence of many older buildings."

Eoin Carty of Bayleys Real Estate said second opinions were being recommended on building-engineering reports, after the Post Office exited its building "like a scalded cat" because of a poor seismic report.

Poor reports were also affecting redevelopment opportunities, he said.

There had been no shortage of choice for commercial tenants fleeing seismically challenged buildings.

Valuer Turley and Co's Hawke's Bay Commercial and Industrial Property Market Report, for the first and second quarter of 2012, cites a "supply bubble" as developers and landlords respond to the seismic status of buildings.

Property analyst Pat Turley estimated the extra supply to be the equivalent of a 24-storey building with 1400sq m per floor.

Logan Stone's report said occupancy levels in Hastings had remained static, but were lower than one year ago: "The current level of occupancy of 93.4 per cent was also evident in August 2008."

Taradale occupancy levels remained static, while Havelock North's increased.

The report noted significant new commercial-property activity.

"The new Farmers store has opened in Hastings and redevelopment of the former Farmers Homestore is now under way.

"Three new retail tenancies have been confirmed within this building.

"Factors external to the CBD retail area but having an influence include the completed, but not occupied, redevelopment of the former Mitre 10 Mega site to provide large-format retail.

"Warehouse Stationery has confirmed they will vacate their Market St premises, leaving another large-format retail store vacant."

WINZ has left Heretaunga St for Eastbourne St, leaving a vacancy.

In Napier, the new Farmers store on Marine Parade and Hastings St is due for completion early next year.