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Rents lift for suburban retail property

Retail business strategies are continuing to evolve in the post-pandemic operating environment, says JLL in its latest market snapshot.

Tuesday, June 27th 2023, 11:36AM

by Sally Lindsay

In the Auckland suburban retail sector, where many mum and dad investors have holdings, average prime rents rose by $25/m2 or 2.7% in the first quarter of this year after remaining unchanged since early 2021, and now stand at $950/m2.

Although vacancy is expected to drop, backfill of existing vacant space needs to be occupied, in order for rents to start increasing, so further increases are not expected this year. 

Another factor stabilising rents is many smaller scale retailers developing their online shopping platforms, and do not need additional retail space for their business to grow.

Suburban vacancy dropped to 9.4% from 11.9%, signifying more than 5,000m2 of space being leased in the first quarter across multiple locations.

On the supply side, 110m2 of retail space in a mixed-use property at 110 Carlton Gore Road was completed in the quarter.

Other developments are underway at Auckland Airport’s Manawa Bay, comprising 100 stores in the premium outlet shopping centre.

Then 10km down the road at Onehunga, Lendlease’s significant $100 million, 7,060m2 three-level retail development planned between Dress Smart and Onehunga Mall has been started.

These developments are expected to be completed by the end of 2025, which will add to the retail landscape.

Asset performance

After softening by 25bps at the end of last year, average net yields for prime and secondary suburban remained unchanged for the first quarter.

Prime and secondary stand at 6.63% and 9.25% respectively. Average net yields for shopping centres also remained unchanged, at 8.63%.

On the other hand, average net yields for bulk retail softened by 13bps to reach 7.75%.

This was the only retail sub-sector with a movement in yields for the first quarter, owing to investor interest in this asset class during last year.

Only one significant transaction for this market was concluded in the first quarter. A property at 9 Rose Road, Ponsonby sold for $8.1 million, at an initial yield of 4.20%.

Tags: commercial property

« Retail on the tipping pointRaid on commercial investors depreciation of assets detrimental »

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Lender Flt 1yr 2yr 3yr
AIA - Back My Build 6.19 - - -
AIA - Go Home Loans 8.74 7.14 6.75 ▼6.39
ANZ 8.64 7.74 7.39 7.25
ANZ Blueprint to Build 7.39 - - -
ANZ Good Energy - - - 1.00
ANZ Special - 7.14 6.79 6.65
ASB Bank 8.64 7.14 6.75 ▼6.39
ASB Better Homes Top Up - - - 1.00
Avanti Finance 9.15 - - -
Basecorp Finance 9.60 - - -
Bluestone 9.24 - - -
Lender Flt 1yr 2yr 3yr
BNZ - Classic - ▼7.14 6.79 6.65
BNZ - Green Home Loan top-ups - - - 1.00
BNZ - Mortgage One 8.69 - - -
BNZ - Rapid Repay 8.69 - - -
BNZ - Std, FlyBuys 8.69 ▼7.74 7.39 7.25
BNZ - TotalMoney 8.69 - - -
CFML Loans 9.45 - - -
China Construction Bank - 7.09 6.75 6.49
China Construction Bank Special - - - -
Co-operative Bank - First Home Special - ▼6.79 - -
Co-operative Bank - Owner Occ 8.40 ▼6.99 6.79 6.65
Lender Flt 1yr 2yr 3yr
Co-operative Bank - Standard 8.40 ▼7.49 7.29 7.15
Credit Union Auckland 7.70 - - -
First Credit Union Special - 7.45 7.35 -
First Credit Union Standard 8.50 7.99 7.85 -
Heartland Bank - Online 7.99 6.89 6.55 6.35
Heartland Bank - Reverse Mortgage - - - -
Heretaunga Building Society 8.90 7.60 7.40 -
HSBC Premier 8.59 - - -
HSBC Premier LVR > 80% - - - -
HSBC Special - - - -
ICBC 7.85 7.05 ▼6.69 6.59
Lender Flt 1yr 2yr 3yr
Kainga Ora 8.64 7.79 7.39 7.25
Kainga Ora - First Home Buyer Special - - - -
Kiwibank 8.50 ▼7.99 7.79 7.55
Kiwibank - Offset 8.50 - - -
Kiwibank Special - ▼6.99 6.79 6.65
Liberty 8.59 8.69 8.79 8.94
Nelson Building Society 9.00 7.75 7.35 -
Pepper Money Advantage 10.49 - - -
Pepper Money Easy 8.69 - - -
Pepper Money Essential 8.29 - - -
Resimac - LVR < 80% 8.84 8.09 7.59 7.29
Lender Flt 1yr 2yr 3yr
Resimac - LVR < 90% 9.84 9.09 8.59 8.29
Resimac - Specialist Clear (Alt Doc) - - 8.99 -
Resimac - Specialist Clear (Full Doc) - - 9.49 -
SBS Bank 8.74 ▼7.74 7.29 6.59
SBS Bank Special - ▼7.14 6.69 5.99
SBS Construction lending for FHB - - - -
SBS FirstHome Combo 6.19 ▼6.14 - -
SBS FirstHome Combo - - - -
SBS Unwind reverse equity 9.95 - - -
Select Home Loans 9.24 - - -
TSB Bank 9.44 7.79 7.55 7.45
Lender Flt 1yr 2yr 3yr
TSB Special 8.64 6.99 6.75 6.65
Unity 8.64 6.99 6.79 -
Unity First Home Buyer special - 6.55 6.45 -
Wairarapa Building Society 8.60 6.95 6.85 -
Westpac 8.64 7.89 7.35 7.25
Westpac Choices Everyday 8.74 - - -
Westpac Offset 8.64 - - -
Westpac Special - 7.29 6.75 6.65
Median 8.64 7.21 7.29 6.65

Last updated: 17 May 2024 9:41am

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