By ANNE GIBSON
Botany was put to the test this week.
Getting half of May's rainfall in one afternoon might have created chaos across the city, but all was fine at the new centre in East Tamaki.
"Not one leak," boasted Botany Town Centre's retail manager, Gale Wieland, "even if the people at
Westfield were hoping it was going to happen on opening day."
She was referring to the rivalry between two Australian financial giants who are slugging it out on the retail front here. Although they are competing for our shopping dollar, Westfield and AMP Henderson Global Investors agree on one key element: build to the max.
For example, Botany's new Farmers store is 1 1/2 times the size of Eden Park.
Rival Westfield has $1 billion earmarked for the expansion of its 11 malls in New Zealand, as well as plans to build its 12th in Newmarket - although this project has gone back to the drawing board after a public outcry against the original 11-level, $450 million mega-mall design.
But AMP took a punt and did something radical. Rather than buying an existing mall, it built its own, cleverly sited in one of the fastest-growing city regions.
Howick, Beachlands, Otara, Panmure, Pakuranga, Clevedon, Mt Wellington, Botany Downs, East Tamaki - the new centre's catchment zone is wide.
But the main difference is in the centre's design, which has its own town square surrounded by side lanes and shopping strips.
The result is the 146-shop Botany Town Centre, which AMP bumped up in value from the projected $180 million last year to $185 million on completion. It cost $90 million to build.
Only five shops remain to be leased, says AMP's property chief, Ant Beverley.
The centre will generate around $16 million in income annually for AMP and investors in its unlisted AMP Property Fund, which last year made a gross return of 7.5 per cent.
The fund also owns Lynnmall in West Auckland, built by AMP in the 1960s and one of New Zealand's first malls.
If a Westfield mall is a large, internally focused square box, AMP's plan for Botany Town Centre has turned out to be the opposite.
The radical streetscape created by the conservative life insurance company came alive on opening day last Thursday.
Instead of an air-conditioned, artificially lit indoors mall, AMP took a punt and built New Zealand's largest shopping centre open to the elements.
Californian Bill Sebring, of Altoon Porter Architects, soon became familiar with our weather patterns and created a structure to deal with the worst extremes, designing elements such as the covered walkways so shoppers could scurry from the bulky goods zone to the town square area on a wet day.
AMP's aim was to expand its investors' exposure to retail, one of property's stellar performers lately, showing less volatility as an investment vehicle than commercial office blocks.
AMP produced an annual return comparison from December 1993 to December 2000, based on Property Council figures, showing that retail outperformed every other type of property investment but was low-risk. Retail returned 14 per cent annually over those years, and had a volatility rating of only 2.5 per cent.
That compares with an Auckland CBD office block returning 8 per cent on average, but with a volatility rating of more than 4 per cent.
Industrial property returns around 13 per cent but is also more volatile than retail at 4.5 per cent, AMP's figures showed.
The upshot is that as long as you can get a good piece of land in the right area and build big, the returns are high and the risks relatively low.
Other reasons behind AMP's investment were its need to re-weight its property portfolio away from offices and more towards shops, the potential for improved returns from retail, a one-off development profit and continuing asset growth.
These, AMP says, are the four key drivers for the Botany development.
Large-format stores of around 2500sq m are rented for $150 a sq m to $180 a sq m annually, and the 500sq m stores for $250 a sq m to $300 a sq m. The specialty shops cost much more, says Ash Hira, retail manager at Colliers Jardine.
Mr Beverley credits Foodstuffs property general manager Gordon Davies for helping AMP to build on the 17.6ha site.
"He had the vision for all this and allowed us to have the land under a conditional contract for 15 months, when we surveyed 700 households to find out what they wanted for the area."
Now, Mr Beverley says, Westfield has been shown a different approach to retailing here.
"The gauntlet has been thrown down," he says, boasting of undercutting the prices for suburban retail rents but still putting tenants on lease terms of around six years to provide security of income for AMP.
Noting some nervousness among the property industry because of recent failures, Mr Beverley believes AMP can rise above this at Botany.
"It's important for AMP to be associated with a project that is successful and stretches the limits."
WHAT: Botany Town Centre, a new shopping centre in East Tamaki, Manukau City, at the intersection of Chapel Rd and Te Irirangi and Ti Rakau Drives.
WHO: AMP Henderson Global Investors, headquartered in Sydney, owns Botany. It has $9.5 billion under management here and manages $1.4 billion of property.
WHEN: The centre opened fully on Thursday, although the bulk stores have been open since October. Building started in November 1999.
WHY: Money. AMP will get between $15 million and $16 million a year, mainly in rent from the 146 retailers.
Links
AMP Henderson
Botany Town Centre
By ANNE GIBSON
Botany was put to the test this week.
Getting half of May's rainfall in one afternoon might have created chaos across the city, but all was fine at the new centre in East Tamaki.
"Not one leak," boasted Botany Town Centre's retail manager, Gale Wieland, "even if the people at
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