Return to the high street

There are clear signs in the leasing market that high street retail is starting to bounce back from the fallout of the global pandemic, with smart national and international retailers taking the opportunity to scope out and secure strategic CBD sites to grow their businesses.

Chris Beasleigh, Bayleys’ National Director of Retail says the New Zealand market can take some cues and confidence from our overseas counterparts with Australia and the UK ahead of our rebound curve in terms of retail activity.

“The UK is about six months ahead of us in the cycle now, with Australia having roughly three months on us.

“Across the three markets there has been an uptick in activity with shoppers returning to the high streets, but most businesses are now having to grapple with staffing shortages which is a challenge in the return to usual trading.”

Beasleigh says Google Mobility data which captures activity from mobile phones at different locations such as home, workplaces, and retail precincts shows activity at all retail and recreation areas has largely recovered in the UK, Australia and New Zealand.

“However, activity at transit/transport stations, which is a reasonable indicator for activity in the CBD itself, remains below pre-pandemic levels which shows there are still challenges facing CBD retailers.

“As the CBD office sector rebuilds with people returning to the office to work, retailers will benefit.”

Talking about the UK market, Bayleys’ global real estate partner Knight Frank reports that while retail sales are not yet fully back to pre-pandemic levels, there is limited evidence to suggest a wholesale belt-tightening by consumers.

It also found that online shopping activity is well back from its COVID-peak, and retail rents have stabilised.

“This is encouraging news for physical retail business in New Zealand, with our consumer and leasing patterns likely to follow suit,” says Beasleigh.

“Sure, we have some economic headwinds with the rising cost of living, pressures on our workforce and a sticky supply chain, but so does the UK and Australia.

“Added to this, banks are also somewhat risk averse to retail landlords and retail business owners.

“Retailers in the high street will need to look closely at their offering and ensure that there is sufficient reason for shoppers to visit and spend in person.”

Beasleigh says Bayleys has seen a noticeable increase in enquiry from Australian retail operators wanting to expand into Auckland and other New Zealand markets, with many representatives visiting to check the lie of the land.

“We’ve been showing them potential sites and walking them through some of the options for growth,” he says.

“Leasing deals are happening, with many high-profile global brands looking to expand into New Zealand, with particular interest from sports and leisurewear brands and well-known food and beverage operators.

“With cruise ships returning to our ports later this year, and with tourism kicking back into gear, high streets in our main centres will benefit from renewed visitor activity so many brands want to position themselves for this.”

Beasleigh says the pent-up demand from consumers to spend is being hindered by retailers having to reduce opening hours or compromise service delivery due to staffing shortages.

“It is important for retailers to communicate disruption to normal operation, as customers are generally understanding of this.

“People want to spend and retailers want to sell so all parties are willing – we just need all the moving parts to line up.”

With expertise and experience across all retail asset classes, Beasleigh says landlords and businesses can engage with the Bayleys retail team with confidence.

“Our team is regularly appointed by institutional entities, private investors, developers and retailers to identify opportunities around New Zealand and we have experience working with some of the most prestigious brands and retail developers across Australia.”

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