Auckland City and Auckland Region s Emerging Retail Trends and Future Retail Needs Assessment

Transcription

1 Auckland City and Auckland Region s Emerging Retail Trends and Future Retail Needs Assessment Prepared for November 2008 Status: Final

2 Project Name: Auckland City and Auckland Region s Emerging Retail Trends and Future Retail Needs Assessment Client: Auckland City Council and Auckland Regional Council Document Reference: ACC Retail Research Disclaimer Although every effort has been made to ensure accuracy and reliability of the information contained in this report, Market Economics Ltd accepts no liability for any actions taken based on its contents.

3 Contents Executive Summary Introduction Background Study Objective Study Scope Report Structure Methodology Emerging Retail Trends and Planning Mechanisms National Retail Trends Large Format Retail Issues surrounding the emergence of LFR International LFR Trends Planning Mechanisms for LFR Auckland Region Retail Activity Current Situation Emerging Trends - Retail and LFR Changes Retail Demand Auckland City Retail Activity Current Situation Recent Trends - Retail and LFR Retail Demand Assessment of District Plan Provisions and Future Capacity Conclusions and Recommendations Summary Implications Appendix 1: Retail ANZSIC96 6 digit Codes Appendix 2: Auckland Region MECs and GUs, Appendix 3: Auckland Region Floorspace, MECs and GUs, Appendix 4: Auckland Region Retail Floorspace (m 2 )

4 Appendix 5: Auckland City MECs and GUs, Appendix 6: Auckland City Floorspace, MECs and GUs, Appendix 7: Auckland City Floorspace, MECs and GUs, Appendix 8: Auckland City & Rest of Region Retail Floorspace Growth, m 2, Appendix 9: Auckland City Retail Floorspace, m 2, Appendix 10: Alternative Thresholds to Define LFR Maps Map 1.1: Auckland City Centres Typology... 5 Map 1.2: Auckland City Business Areas Typology... 5 Map 4.1: Auckland City Isthmus District Plan Catchments Tables Table 2.1: Auckland Malls and LFR Centres (2007) Table 3.1: Auckland Region Employment by Top 10 Sectors, Table 3.2: Auckland Region Output and Value Added by Top 10 Sectors, 2006 (EFM) Table 3.3: Auckland Region and National Retail Sales 2007 ($m) Table 3.4: Auckland Region Retail Sales 2007 ($m) Table 3.5: Auckland Region Retail Employment (MEC), Table 3.6: Auckland Region Floorspace (GFA), Table 3.7: Auckland Region LFR and SFR Retail Floorspace (m 2 ), Table 3.8: Auckland Region Retail Employment Change (MEC) Table 3.9: Auckland Region Retail Floorspace (m 2 ), 2001 and Table 3.10: Auckland Region Retail Floorspace Demand and Supply Table 3.11: Auckland Region Retail Demand ($m) Table 3.12: Auckland Region Retail Floorspace by Storetype Table 3.13: Auckland Region LFR Floorspace Growth by Retail Type Table 3.14: Auckland Region Retail Demand ($m) by Territorial Authority Table 3.15: Auckland Region Retail Floorspace Growth by Territorial Authority Table 3.16: Auckland Region LFR Floorspace Growth by Territorial Authority Table 3.17: Auckland Region LFR Floorspace by TA, Excl Automotive & Hardware-DIY Table 4.1: Auckland City Employment by Top 10 Sectors, Table 4.2: Auckland City Output and Value Added by Top 10 Sectors, Table 4.3: Auckland City Retail Sales Table 4.4: Auckland City Retail Employment (MEC),

5 Table 4.5: Auckland City Retail Floorspace (m²), Table 4.6: Auckland City Large and Small Format Retail Floorspace (m 2 ), Table 4.7: Auckland City LFR Floorspace (m 2 ) by Spatial Economy, Table 4.8: Auckland City Retail Sector, Table 4.9: Auckland City Employment (MECs) by Spatial Economy Table 4.10: Auckland City Floorspace (m²) by Spatial Economy Table 4.11: Auckland City Retail Demand & Supply (m 2 ) Table 4.12: Auckland City Retail Demand ($m) Table 4.13: Auckland City Retail Floorspace by Storetype Table 4.14: Auckland City Retail LFR Floorspace by Storetype Table 4.15: Auckland City Retail Land Requirements Table 4.16: Base Assumptions for Retail Capacity by ACC Business Zone Table 4.17: Potential Retail Capacity in Auckland City Table 4.18: Business Zoned Areas in the Auckland City Spatial Economy Table 4.19: Potential Retail Capacity in Business Zoned Areas in Auckland City Table 4.20: Potential Retail Capacity in Business Zoned Areas in Auckland City

6 Executive Summary Objective The study objective is to understand the likely requirements for LFR in relation to other types of retail in Auckland City and Auckland Region over the next two decades (up to 2026). Both Auckland City and Auckland Regional Council (ARC) have growth strategies that envisage a compact urban form, focussed around town centres, with retail activity a core component of these centres. However, the trend toward large format retail (LFR) and the propensity for LFR to locate outside the established centres structure, in precincts or as stand-alone stores in general business zones, especially to take advantage of cheaper land and larger sites, has potential to undermine or diminish the centres-based structure. The retail trends and the drivers of retail dispersal are not well understood by Council, and current regulations are seen as having limitations in dealing with LFR issues. Accordingly, Council seeks a better understanding of the key locational drivers of LFR, and the effects of out of centre retail, and knowledge of effective instruments to accommodate LFR in a pattern consistent with the urban form objectives. Study Findings A substantial increase in retail floorspace is projected to serve the Auckland City market, arising from population, tourist and business growth, and increase in real consumption per capita. The Auckland City retail sector will also attract a share of retail spending power from the other parts of the Auckland Region. Retail floorspace in Auckland City is projected to grow significantly from the current 1,352,000 m 2 to 1,647,000m 2 by 2016, and 2,018,000m 2 by This is annual growth of around 31-33,000 m 2 of retail floorspace. Large Format Retail is expected to account for around half the floorspace growth, or around 16-17,000 m 2 annually. Retail activity is currently concentrated in the City s centres, particularly the CBD, Sub-regional and Large suburban centres. Around 20% of retail space is located in business areas, though much of the retail outside of centres is LFR. The business zoned areas in Auckland have potential to accommodate around 1,174,000 m 2 of retail space. The Business areas have potential for a further 589,000 m 2, and including other areas, the total indicated capacity is around 1,839,000 m 2. This compares with projected demand of 2,018,000 m 2 by 2026, indicating a net shortfall in the medium term. If higher development intensities are achieved, then the potential capacity is greater. 1

7 In gross terms, there appears to be considerable capacity for further expansion of the existing centres, based on zoned areas, development potential and current levels of floorspace. However, a substantial share of capacity in the centres is located in and around the smaller centres, and zoned capacity for expansion is more limited for the larger centres. Further, the economics of the retail sector mean that much of the retail investment is likely to be directed at the larger centres, with minor shares for the smaller centres. This will place increasing pressure for expansion of the retail capacity of the larger centres, notably the Sub-regional and Large Suburban centres. The relatively large share of floorspace potential in the Business areas, and generally lower land costs, means that these will continue to be attractive locations for new retail development, especially for LFR. Development proposals for major stand-alone stores or groupings of LFR outlets are expected to lead the pressure for out-of-centre retail growth. The large extent of the Business 4 zone, in particular, suggests there could be widespread opportunity to encourage retail development, especially LFR, into business areas, particularly if the capability to expand the larger centres is constrained. Implications The study findings highlight the need for careful consideration of retail and service provisions in the forthcoming District Plan review process. It is important to adequately provide for the substantial growth in floorspace in the City, without occasioning a substantial dispersal of retail floorspace across the Business areas, and undermining the retail and wider roles of the centres network. The large scale of growth in the next two decades offers needs and opportunity. The need is to accommodate retail in a pattern which enhances wider City and regional objectives. However, the rate of growth is such that the next two decades provide opportunity to achieve desired urban form outcomes. By 2026, a third of Auckland City s floorspace will have been developed post Thus, if a more dispersed strategy is followed, then the retail patterns would be significantly different from the current, centres-based pattern within just two decades. Conversely, a centresbased strategy which resulted in significant shares of retail growth being in the larger centres and the CBD would reinforce the centres-focus within a relatively short time frame. 2

8 If significant shares of retail growth are located in business areas, rather than in the centres structure, then there will be opportunity cost for other business, and direct impact on the role of centres and urban efficiency outcomes. Retail development in business areas will compete for land with other business activities, in a period when significant increase in average business intensity is expected. The up-take of business area land for retail will be an opportunity cost in terms of land capacity if the same scale of retail could have occurred at higher levels of intensity elsewhere in the Spatial Economy. The dispersal of retail and service activity across business areas effectively reduces the wider roles of centres simply because their retail and service role is less than it would otherwise have been. The concentration of retail in and around centres generally enhances the amenity delivered by centres whether the functional amenity arising from convenience, travel efficiency and choice associated with the co-location of activities and services in centres, or the social amenity occasioned by the role of centres as generators of people activity and interaction. These considerations highlight the options for Auckland City with respect to provision for retail growth. If a centres-based strategy is maintained, then this implies the need to both ensure there is appropriate capacity for expansion of the existing centres structure (particularly the larger centres within the network), and also examine carefully the provisions which have enabled dispersal of retail activity through development in the Business 4 and other zones. If there is any tightening of retail opportunity outside the general structure provided by the centres network, then this needs to be balanced through provision for growth within the centres network. The natural tension between the large land requirements of large format retail and the higher cost of land within more intensively developed centres suggests a middle path of enabling LFR to establish in and especially around the centres network, without enabling similar development in a dispersed manner across business areas simply because of the current zoning of the land. This implies greater spatial differentiation within the zoned areas, especially with regard to the Business 4 land which is widespread in the City, in order to provide for and encourage LFR to be part of the incremental growth of the existing centres structure. 3

9 1 Introduction 1.1 Background Auckland City Council (ACC) is aiming to publicly notify the Isthmus District Plan in 2009/10 with objectives, policies and rules for managing retail activity. Retail is a major contributor to the city s GDP, and is a key driver of urban form and function. It plays a crucial role in servicing domestic demand and underpins the role and function of centres. Both the Council and Auckland Regional Council (ARC) have growth strategies that envisage a compact urban form, focussed around town centres. The location and nature of retail activity may contribute to, or may compromise, this vision. The recent trend within the retail sector toward large format retail (LFR) has coincided with the propensity for these large stores to locate outside the established centres structure, often in general business zones or in stand-alone out-of-centre locations which are cheaper and/or allow easier development. At the same time, the historic distinction between wholesale and retail activity has weakened, and contributed to a general tendency for retailing to become more spatially dispersed within urban environments. These and other trends, and the drivers behind them, are not well understood by council, and current regulations do not specifically deal with LFR issues. In order to formulate appropriate policies and regulations, Council needs to obtain a better understanding of the effects of out of centre LFR, and the key locational drivers for this type of retailing. At the same time, the Auckland Regional Council (ARC) has also indicated a desire for better understanding of the future for retail within the region. ARC has highlighted that territorial authorities are becoming increasingly aware of the need for better planning mechanisms for retail activity. ARC would like to obtain robust data for the region and sub region that identifies future demand for retail sub categories (employment and floorspace requirements), and the associated planning implications of such growth. 1.2 Study Objective The principal objective of this study is to understand the likely requirements for LFR in relation to other types of retail over the next two decades (up to 2026). The research is being undertaken primarily for Auckland City Council. However, Auckland Regional Council also requires better understanding of the retail sector, emerging trends, planning mechanisms and future growth, and is a partner in the project. 4

10 For Auckland City, the key research components are: Assessing the current retail situation and recent emerging trends (floorspace and employment). This includes assessing their relevance to land use patterns, especially the location drivers of retail activity. Estimating future retail demand for LFR and SFR by location in Auckland City (floorspace and employment). Comparing supply of zoned retail land (according to District Plan provisions) with future demand, and identifying whether modifications are required to existing District Plan rules to achieve the City s objectives. For Auckland Region, the key research components are: Assessing the current retail situation and emerging retail trends for the region overall, and at the territorial authority (TA) level. Estimating future demand for LFR and SFR by TA and for the region overall. Exploring alternative planning mechanisms for managing retail activity, especially with respect to LFR and out-of-centre developments. 1.3 Study Scope A range of LFR types are present in Auckland City and the Auckland Region, including; Supermarkets (New World, Foodtown, Pak n Save etc.) General Merchandise (The Warehouse, Briscoes, Farmers etc.) Bulky Goods Retailing (Bunnings, Placemakers etc.) Factory Outlets (Dressmart, Bendon etc.) Auckland City has identified that, in terms of locational needs, there are two main types of large format retailing: Large Format Retailing the business model involves having a wide array of goods on sale in a large footprint store. Most customers are expected to access the store by car, which means that LFR areas tend to act as destination shopping areas when located in an out of centre location. Bulky Goods Retailing this type of retailing is large format in nature because it involves storage and sale of large, bulky goods (for example beds, cars, furniture etc). For the study, retail activity is defined according to the Australia New Zealand Standard Industrial Classification 1996 (ANZSIC96) Division G Retail Trade (at 6-digit level) and also Division H Cafes and Restaurants. However, bulky goods retailing includes Builders Supply and DIY outlets (F and F453900) and these are covered in the study, because the Statistics NZ Business Frame 1

11 currently reports in ANZSIC96 terms, which describes these activities as wholesale rather than retail trade.. Appendix 1 contains a full list of 6-digit ANZSIC96 for Division G. This study groups 6-digit ANZSIC96 business location and modified employment count (MEC) information into nine broad retailing groups and splits floorspace and activity by LFR and SFR activities. 1.4 Report Structure The report is structured as follows: Section 1 covers the study objectives, scope and structure. The sub-sections below present detail on definitions and conventions, information sources, definition of the Auckland spatial economy (centres and business areas), and the methodology applied for both the Auckland Region and Auckland City components of the analysis. Section 2 provides a background discussion on national trends in the retail sector, focussing on large format retail and potential planning mechanisms for managing changes in the retail and business environments. Section 3 sets out the current retail situation, and examines recent trends in retail employment and floorspace in the Auckland Region. This section provides estimates of LFR, SFR and total retail floorspace and employment to 2026 by local authority area and for the region overall. Section 4 outlines current and recent emerging trends in retail employment and floorspace in Auckland City, by location and across the spatial economy. The section provides estimates of LFR, SFR and total floorspace and employment to 2026 by location and for the City overall. The section also includes assessment of the available zoned capacity for retail floorspace by catchment, and a comparison of retail demand with land supply to show areas of pressure and availability. Section 5 summarises the findings of the report and contains recommendations about required changes to the District Plan to accommodate future growth. 1.5 Methodology The study draws on data from a variety of sources and integrates this information into a comprehensive structure for the analysis, drawing on a number of proprietary models developed by Market Economics Ltd. A detailed explanation of each of these models follows. 2

12 1.5.1 Auckland Region Spatial Economy The study uses the updated Spatial Economy 1 for Auckland City and Auckland Region as the spatial framework. The Spatial Economy (SE) is the generic term for the network of commercial centres and business areas in the Auckland Region. The SE provides a useful structure to both describe how business activity including retail is distributed within Auckland, and also to help understand what drives these patterns of activity. It recognises the existing patterns of centres and business areas in terms of the size, location and roles within the economy, and is the appropriate base point for assessing future growth trends. Because there is detailed statistical information available at a refined geographic level (mesh-block and property base) the SE provides the appropriate structure to integrate information on retail and business activity and supply, in relation to zoning and property information, and in regard to retail market and demand information for catchments relevant to each centre or business area. The main elements of the Spatial Economy are: Centres Regional (Auckland CBD) Sub-regional Large Suburban Suburban Local Minor Destinational (mainly large format) Arterial Strips Rural (Towns/Villages) Business Areas Heavy Industry Production and Distribution Business Park Office Park Special Activity Area (incl airport, port) Special Areas (mainly health, education/research, sport facilities) The balance of the region is defined as non-economic areas, including residential areas, public open space, and so on. 1 Formerly named the Formal Economic Structure (FES) in the ARC Business Land Model (BLM). 3

13 To represent the SE, every location (meshblock) in the region has been coded according to the economic role of its locality, defined from the presence of business zoning and the size and mix of businesses by industry sector. This SE classification process involved overlaying District Plan zoning information with 3-digit ANZSIC96 Business Frame information in a GIS. This was based on the former FES definitions, which were updated according to 2007 data and in association with BLEG 2 definitions of business areas. Each meshblock has been classified according to whether it is a centre, business area, special area or non economic area. Meshblocks which have been identified as centres have been assigned a centre name (e.g. St Lukes, Takapuna etc), and each centre has been classified into the hierarchy of Regional, Sub Regional, Large Suburban and so on (listed above and shown on Map 1.1). Meshblocks identified as parts of business areas have been assigned the relevant area name and the business area type as Heavy Industry, Business Park and so on (listed above and shown on Map 1.2). The special area code has been introduced to define locations with high education and health employment in a separate category, while non economic areas are those areas that do not have a significant number of employees or significant quantity of business zoned area. All of the areas within the Region (at mesh-block level) have been coded to the relevant category. The SE thus provides the spatial framework that can be used to analyse information from other sources such as employment data from the Statistics New Zealand (SNZ) Business Frame, ACC zoning information, and PropertyIQ property information. 2 Business Land Economy Group 4

14 Map 1.1: Auckland City Centres Typology Map 1.2: Auckland City Business Areas Typology 5

15 1.5.2 Statistics New Zealand Business Frame This retail assessment uses employment and geographic unit (business) data by meshblock for 2001 and 2007 to show the location of retail activity within the Auckland City and Auckland Region economies. Employment is reported using two measures Employee Count (EC) and Modified Employment Count (MEC) 3. Since 2004, EC has been the key measure of employment for SNZ. It is a head count of all salary and wage earners for a particular month based on IRD tax data. This is mostly employees, but can include working proprietors who pay themselves a salary or wage (i.e. are also employees). However, those working proprietors who take drawings from their business but not wages or salary are not counted in the EC due to the data collection method. Many owners of small businesses are not employees (for example - dairy owners, builders, small fishing businesses, and service business owner-operators). Thus EC by its nature is an undercount of actual employment. Recently, statistical information has become available from the SNZ LEED system, which provides counts of the numbers of working proprietors in each sector of the economy, and some detail on the numbers of working proprietors who are not also employees. That data suggests that working proprietors who are not employees account for around 15% of total employment. This LEED data has been utilised by MEL to develop another measure of employment, the Modified Employment Count (MEC). This includes both the Employee Count and the estimated working proprietors, to provide a more comprehensive measure of total employment, for each sector and location. The MEC estimates are developed from: Linked Employer-Employee Data (LEED): Annualised employment data by industry disaggregated as to employees (E) and self-employed people (WP). Self-employed people were disaggregated further into those who pay themselves a salary or wage (S) and those who do not (N). The WP(S) persons are most likely to be included in the Employee Count, while the WP(N) persons are most likely to be workers additional to the EC. The LEED data is only available at TA, regional or national levels. This means the number of non-employee WPs can be calculated to the TA level, but needs to be estimated at the CAU or mesh-block level. Business Frame (BF) data: the annualised (as at February 2007) Employee Count (EC) data. Employees (E) and self-employed people who pay themselves a salary or wage (S) identified 3 Modified Employment Count is an alternative employment measure developed by Market Economics. 6

16 by LEED are essentially the same as Employment Count (EC) as measured by the BF (i.e. E + S = EC). The BF Employee Count is available at mesh-block level. The BF data has been used to estimate the ratio (E:S) of employees (E) to working proprietor employees (WP(S)) included in the BF, and then to estimate the number of other working proprietors who are not counted by the BF (WP(N)). The ratio of total working proprietors to working proprietor employees was also calculated. SNZ Business Demography and LEED: The number of geographic units (business locations), by firm size 4 by industry. LEED: total self-employed persons by firm size by industry. This data provided the basis to estimate the numbers of non-employee working proprietors in each industry, for each year , for each firm size, for each industry. The BF data on the numbers of firms (geo units) of each size by industry in each location was used to estimate the numbers of non-employee working proprietors in each industry in each location, for The output from this process is an estimate of the number of non-employee WPs for each industry and location. These estimates are added to the BF data, to provide the Modified Employment Count (MEC). Because annual LEED data is not available until 12 months after the end of the reference period, 2007 data will not be available until the end of For this study, the 2007 non-employee WP figures were estimated, based on the BF data on each firm size (2007) and assuming the recent trends ( ) in the numbers of WPs per geo unit had continued into Correlation coefficients indicated this was a valid assumption, and the estimates will be replaced when the 2007 LEED data is released Auckland Region and Auckland City Economic Futures Model The Economic Futures Model (EFM) provides information on the broader economic context for this study. The EFM is an input-output based model, which develops economic projections based on the current situation, and projections of population growth (driving domestic consumption) and export growth by sector, to 2026, for Auckland City and Auckland Region. The EFM projections identify the basic business-as-usual future situation, assuming incremental growth, but no major structural shifts in the city or regional economies 5. 4 Firm size groups are 0 employees, 1 to 5, 6 to 9, 10 to 19, 20 to 49, 50 to 99 and 100+ employees. 5 For further information refer to Auckland City Baseline Economic Report or the ARC EFM Model. 7

17 1.5.4 Retail Projections the Retail Supply and Demand Model 2008 The current and future retail and service situation has been estimated using the Market Economics Retail Supply and Demand Model (RSDM), applying growth projections for population and consumption consistent with the EFM. The EFM provides base information for the retail sector as a whole, but does not provide detail within the retail sector, nor does it provide information at local area level. The RSDM provides a detailed analysis of the current (2007) situation, together with projected growth to 2026, at a refined geographic level (to area unit). This study requires the more detailed projections, especially because the incidence of large format retail varies considerably within the retail sector, and it is important to understand how growth in retail demand is likely to vary within Auckland City, as well as within the Region. RSDM Overview The RSDM is calibrated at the national and regional levels to provide a comprehensive picture of retail and service expenditure and demand by storetype (6 digit ANZSIC), by location. Retail demand is expressed in terms of annual spend ($m), sustainable floorspace (m²) and sustainable employment (EC and MEC). The demand estimates are based on the number and composition of resident households, their spending characteristics by each retail and service type, together with employment and visitor numbers (international and domestic) with spending estimates per visitor night and per person employed (MEC). The household spend estimates include allowance for a share of spend to be from the place of work, as distinct from the place of residence. Retail demand is reconciled with annual sales data (Statistics NZ Retail Trade Survey and GST-based sales series for other sectors) at the national level for each retail and service type, and where available with regional sales statistics. The RSDM draws on national level data on employment (EC and MEC) by storetype, to show annual average sales per EC or MEC. It includes national level estimates of floorspace (GFA m²) for each storetype, based on actual data where available, and estimates where floorspace data is not available. The floorspace estimates are reconciled with annual sales data to identify national level sales productivity ($ per m² per year) for comparison with national or sector level data where available. We note that there is no comprehensive floorspace data for each retail type, although there is good data for some retail types (for example supermarkets, department stores) and substantial data for specific retail chains and shopping centres. The RSDM further provides estimates of future demand in terms of $m spend and sustainable floorspace, to These estimates are based on projected household numbers (Statistics NZ 8

18 medium, high and low scenarios), employment, and tourism nights (Ministry of Tourism, 2007). The model makes allowance for ongoing real growth in retail spend per household (1% p.a. compounding) business spend (1% p.a.), and international and domestic visitor spend (based on Ministry of Tourism projections). The spend per household estimates are based on medium term projected growth in private consumption from the Reserve Bank and Treasury forecasts. The floorspace projections are based on the projected growth in retail spend, but also make allowance for future increases in floorspace sales productivity, assuming an annual rate of 0.5%. This means that the growth in sustainable floorspace is slower than the growth in demand, to allow for higher sales productivity in the future. Regional Calibration The RSDM has been calibrated at the regional level, since demand per household varies between regions, and the structure and productivity of the retail and service sector also varies between regions. There are three main sources of difference between regions: Variations in sales per EC or MEC. There are differences in the effort or number of hours worked per EC or MEC, arising because the EC data is a count of employees, irrespective of the number of hours worked thus, a person working 10 hours per week and another working 40 hours per week are both counted as 1 person. The sales per EC or MEC are likely to reflect this difference in effort/hours worked, although regional differences in average wage rates will also have some influence. Data on annual earnings per person employed, from the Statistics NZ LEED information by region and industry for 2006, has been used as an indicator of regional differences in effort per EC and MEC. To allow for regional differences in wage levels per hour, the regional differences are assumed to be predominantly (75%) due to differences in hours worked, with the balance (25%) reflecting different wage levels. Thus, a region with average earnings 10% above the national average is estimated to have sales per MEC at 7.5% above the national average. Variations in Regional Retail Structure. The retail supply structure varies between regions, for example, some areas having higher shares of food and grocery spend met by supermarkets while others have more grocery and dairies and fruit and vegetable shops. This largely reflects differences in the demand patterns, with smaller markets (many rural towns) not large enough to sustain some storetypes. The retail sector frequently caters for local demand through storetypes carrying a wider or different range of goods from the average for that storetype, or through some needs being met by more specialised outlets in neighbouring regions. The RSDM reflects these regional differences through adjustment of the % shares of demand to reconcile more closely with the % shares of retail capacity. 9

19 Demand Flows between Regions. Not all regions are self-sufficient in retail and service activity, particularly in comparison retail. While inter-regional flows of food and grocery spend are minor, there is some spending leakage out of smaller regions, and inflow to the main metropolitan centres of Auckland, Wellington and Christchurch. The retail sales levels implied by regional LEED earnings data suggests that there is a net inflow of comparison goods spending to outlets in Auckland Region from residents of Northland, and also Waikato and Bay of Plenty. Similarly, net flows from Gisborne to Bay of Plenty and Hawkes Bay, and in turn some flows from Taranaki, Manawatu and Hawkes Bay to Wellington. Statistics NZ releases estimates of sales by retail type at the national level, and also provides estimates of sales at the regional level, though noting that the figures are less reliable and should be treated accordingly. For larger regions including Auckland, as well as regional total, some breakdown of sales by retail type is available, although in some cases the storetypes are grouped. The RSDM makes use of SNZ sales estimates (June year, 2007) for Auckland Region, noting the caveats cited by SNZ. The sales estimates for Auckland indicate some net inflow of spending in both food and grocery (8-10%) and comparison retail (11-12%), with total sales in excess of the estimated available spend. These inflows are mainly from Northland and Waikato, as well as the Bay of Plenty. Application to this Study The RSDM has been applied here to provide estimates of: Current retail demand ($m, floorspace, MEC for 2007) by catchment in Auckland City and for each TA within the Auckland Region, for each retail and service store type. Current retail supply, in terms of: o Current sales ($m) by catchment in Auckland City and for each TA within the Auckland Region. These are based on the 2007 EC and MEC counts, and the estimated regional sales productivity levels; o Floorspace (m²) based on national average m² per MEC and allowance for 5% lower floorspace per MEC to reflect the higher levels of sales productivity in the market, together with higher rental levels; o Employment, based on $m of sales, and Auckland Region sales productivity levels. Projected retail and service demand to 2026, based on projections of household numbers, domestic and international visitor nights, and employment by location (area unit) within the Region. Demand estimates are expressed as $m sales and sustainable floorspace m². Future retail demand is estimated at five year intervals from 2007 to 2026 by catchment and TA in floorspace and employment terms. The demand estimates combine projected household, business and tourism growth with allowance for future increases in real spend per household. 10

20 Floorspace based on demand growth and future floorspace productivity ($/m²/yr), separately for large format stores (500+ m² gfa) and small format stores (<500 m² gfa). Current Auckland Situation The Auckland Region retail sector is not simply the aggregate of seven TA markets and self-sufficient supply networks. While the large size of each TA market means that each is largely self-sufficient in net terms, there are spending flows within the Region, as well as from Northland, Waikato and Bay of Plenty. Auckland City, mainly because it has the regional CBD, has a higher level of employment and outlets (GUs) per household than the rest of the Region, indicating a net inflow of sales to Auckland City outlets. To identify this, the 2007 demand and supply situation for each TA within Auckland Region has been estimated using the RSDM outputs, and the net inflows to Auckland City have been estimated from the direct comparison of demand arising within the City, relative to estimated sales by retail and service outlets. In a similar manner, the RSDM has been applied to each of the ACC catchment areas to estimate the demand arising in each, in relation to sales by outlets within each, and the net flows within Auckland City. Future growth in demand and floorspace has also been estimated for each TA, and for each catchment area within Auckland City. These reconciliation and projection procedures, and the results, are set out in more detail in relevant sections of this report Summary Retail Types The estimates at 6-digit ANZSIC level have been grouped into nine broad retail categories. Supermarkets Other Food and Grocery Cafes and Restaurants Department Stores Apparel Furniture, Appliances and Hardware (FAH) Household Services Other Retail Automotive 11

21 In addition, estimates have been produced for the Builders Hardware and DIY wholesale category, since this is a major generator of demand for LFR space Large Format Retail (LFR) Estimates An important objective of the research is to gain better understanding of large format retail activity, and its role within the retail sector. There is limited information on the amount of large format retail space, and the shares of large format within each retail storetype, with no comprehensive national or regional level floorspace statistics. However, there is detailed information available on the numbers of stores in each size range (EC per GU), from which the floorspace of outlets can be estimated. Two estimates have been undertaken for this study. First, to understand the current and future distribution of LFR within Auckland Region, the numbers of outlets in each floorspace size band have been estimated, using the EC and MEC data, and the regional estimates of floorspace (m²) per EC and MEC. This has been done at the 6-digit ANZSIC96 code level, using the Statistics NZ 2007 meshblock level dataset for the Auckland Region. This provides an estimate of the current floorspace in large format outlets, for each location within Auckland City, and the Region. The base LFR definition used for the study is 500 m 2 gfa. Estimates have been produced for each location to show the current distribution of activity within Auckland Region and Auckland City. We note that the current gfa thresholds in the Auckland City District Plan vary, from 200 m 2 to 1,000m 2 as indicators of the LFR thresholds. Further, it may be argued that stores in the 500 m 2 to 1,000m 2 range represent medium format retail, with the threshold for large format being 1,000m 2 and over. To accommodate this, the underlying analytical model has capability to alter the threshold, for further assessment, with outcomes in terms of the amount of floorspace, employment and number of businesses by 6-digit ANZSIC96 live within the model to provide alternative estimates of LFR and SFR activity by location. Second, a national level analysis by 6-digit ANZSIC96 has been undertaken, which combines Statistics NZ data on outlets by size (EC per GU) with estimated floorspace per EC and MEC. This provides an estimate of the number of outlets and the total floorspace by each size of outlet, for each storetype, at each time period. Further, it enables comparison of the structure of each storetype by outlet size for any period between 2000 and 2007, to show both the situation and the trend across New Zealand. The floorspace levels have been estimated for 2000 and 2007, to understand the national situation in each year, and estimate the shares of the net increase in retail floorspace which has been in large format and small format outlets. The shares of future floorspace growth applied for each general retail storetype are as follows: 12

22 Supermarkets 100% Other Food and Grocery 25% Cafes and Restaurants 7.5% Department Stores 95% Apparel 30% Furniture, Appliances & Hardware 75% Other Retail 50% Household Services 5% Automotive 20% Builders Hardware DIY 95% These percentage shares have been applied to the floorspace growth projections to estimate floorspace areas in LFR and SFR configurations, for each TA and catchment within Auckland City PropertyIQ Floorspace Information To provide for better understanding of the retail floorspace situation in the Region, detailed information on commercial retail and commercial multiple/other 6 (mixed use) floorspace has been sourced from PropertyIQ for all Territorial Authorities in Auckland Region to provide an estimate of existing floorspace by location. This PropertyIQ data identifies the numbers of assessments and the listed floorspace data, at meshblock level. However, direct comparison is difficult as the PropertyIQ data does not differentiate between retail types, nor does it necessarily differentiate between retail and wholesale activity (for example, a Mitre 10 may be identified in PropertyIQ as retail ). Further detail is currently being sought from PropertyIQ to provide for closer reconciliation of the supply data with the MEL estimates based on the MEC data Property Council Shopping Centre Database 2007 The Property Council Shopping Centre Database 2007 has been used to show the retail and total centre floorspace for larger centres and shopping malls in the Auckland metropolitan area. This database is published on an annual basis by the Property Council, an organisation representing building owners and managers, and whose membership comprises mainly shopping centre owners and managers. 6 The category commercial multiple/other collects information about buildings that do not have a predominant use, for instance there could be a three storey building with retail on the ground floor and the upper two floors with office space (mixed use). To capture as much of the retail component from this category as possible, PropertyIQ ran a query using another variable shop to estimate the retail floorspace captured in this category. This query produced an estimate of known retail and other commercial mixed use floorspace. 13

23 2 Emerging Retail Trends and Planning Mechanisms 2.1 National Retail Trends The New Zealand retail sector has been characterised by several significant trends in the past two decades. This section first provides a description of the types of retail which have larger site requirements than small format core retail. It then provides an overview of the key trends in the NZ retail sector, with a specific focus on large format retailing. These trends are discussed in relation to international trends and possible planning mechanisms for accommodating retail growth for both small and large format Retail Type Definitions A key objective of this report is to provide estimates of the spatial requirements for future retail growth in Auckland City. Some retail operations require more space than others because of their economic and operating structure, and/or because of the nature of the goods that are sold. Supermarkets are large stores because of economies of scale, and the food and grocery market is big enough to sustain multiple outlets. Department stores are structured to achieve both economies of scale and of scope (wide range of goods), and within each department need to offer enough product range (and therefore floorspace) to compete with specialist stores. In turn, the specialist stores such as appliances and sporting goods also have large format outlets when they seek to provide enough product range to be a single destination within their category. This is especially so for appliance outlets, with relatively bulky goods requiring display and storage. There are other examples of socalled big-box retailing in hardware and homewares such as Bunnings and Mitre 10 Mega, which typically require large premises (greater than 6,000 m²) for the storage of bulky items such as timber and building materials, to provide a comprehensive range of associated products (tools, paint etc), and to enable on-site vehicle access (such as timber yard drive through). The size and operation of larger stores (including how their customers use them) affect their compatibility with retail centres. Thus, supermarkets and department stores are generally more compatible with in-centre retailing than are the big box hardware and homeware outlets. This section provides a description of the key differences between retail types. Large Format Retail. Floorspace is usually the sole basis of defining a retail store as being large format. There is no agreed size threshold in New Zealand for what size constitutes large format, although there is general agreement that stores greater than 500m² can be classified as LFR the debate is whether stores of 300 or 400 m² are large format. Moreover, there is no widely accepted basis for distinguishing large format stores according to their operational structure. While large format stores are assumed to be characterised also by lower staffing intensity (persons engaged per 1,000 m²) or the nature of products sold (especially bulky goods) these aspects do not necessarily apply. For example, supermarkets are large format but high intensity in terms of sales levels at $11-13,000 per m²/yr, and employment at persons per 1,000 m²), whereas a department store like 14

24 The Warehouse has lower sales intensity ($3,600 per m²/yr) and employment (20 persons per 1,000 m²). Similarly, pharmacies may exceed 500 m² in floorspace, but still operate in very similar manner (sales and employment intensity) to pharmacies of m². While there is a tendency for the very large stores to locate in newer developments outside the existing centres structure, this does not apply to any store of 500 m² or larger. This trend is primarily the very large stores because of their requirements for larger site areas, and especially the biggest supermarkets and the bigger hardware and DIY outlets. Supermarkets there has been a long term trend towards large supermarkets (>3,000m² gfa), and away from the smaller outlets (1,500-2,000 m² gfa) established in the 1980s. There is also size differentiation between discount supermarkets (Pak N Save, Countdown) which are larger footprint (for example, both Albany and Lincoln Pak N Saves are over 8,000 m² gfa) and full service outlets (Foodtown, Woolworths, New World) which are predominantly in the 3,000 5,000 m² gfa range. The increase in supermarket size has been supported by greater consumer mobility, strong competition in the sector encouraging scale economies, and the wider range of goods sold (especially wine and beer, also non-food items), and real growth in spend per household. Larger stores have meant generally larger catchment areas, so that supermarkets tend to locate in larger centres (suburban centres or higher in the spatial economy), with consumers predominantly accessing the stores using private transport (cars). The high frequency of supermarket shopping (on average, visits per household per week) means that supermarkets are major generators of people traffic in centres, with many of the smaller outlets in centres (such as pharmacies, stationers and post shops) benefiting from this large customer base (on average, supermarkets generate 950-1,000,000 customers annually). The co-location of smaller outlets with supermarkets in the centres structure supports opportunity for multi-purpose shopping trips, and associated travel efficiency. Hypermarkets while well-established internationally, the hypermarket concept has not yet emerged in the Auckland retail market. These stores are large department stores and supermarkets under one roof, selling a wide range of products, including food and groceries and general merchandise. The Warehouse Extra at Sylvia Park (around 12,500 m² gfa) is the only operating example in Auckland currently, however, although the Countdown development adjacent to Manukau City centre was also approved for a supermarket and department store structure. However, The Warehouse has since announced there will be no more of the Warehouse Extra outlets, so the future of hypermarkets within the Auckland market remains uncertain at this stage. Concerns overseas about hypermarkets is that because they sell a wide range of goods and function as one-stop destinations, then they do not offer the benefits which arise from co-location of retail activities in a centres structure. The large space requirements (10,000+ m² gfa floorspace, plus around another 1.5 times that for parking) would suggest limited opportunity to establish within the centres structure, and corresponding demand to establish in out of centre locations. 15

25 Department Stores these stores by definition sell a wide range of goods including clothing, housewares, cosmetics, fabrics, furniture and appliances. In the New Zealand market, key players are Farmers, The Warehouse and K-Mart. Department stores are characterised by large store size (for example, The Warehouse stores average over 5,400 m² gfa and the larger stores exceed 12,000 m² gfa ) to provide sufficient product range and depth to compete with specialist stores, and generate large customer numbers (for example, The Warehouse stores attract on average ,000 customers annually). Their wide range of goods, especially apparel, means department stores are often part of more general, multipurpose shopping trips, and they are often anchor tenants in shopping malls, or in edge of centre locations. Rarely do they establish as stand-alone stores, and to a greater degree than supermarkets, they benefit from co-locating with other outlets to attract customers and enable multi-purpose trips and cross-shopping. Most department stores in the Auckland market are larger than 4,000m² gfa, with the largest outlets between 6,000-10,000m² gfa, for example The Warehouse Albany (7,200m²), Farmers Albany (10,000m²) Farmers Botany (7,500m²), Farmers St Lukes (7,100 m²), K-Mart St Lukes (6,400m²), and Farmers Manukau (8,000 m²). Big-Box Retailing. This term is predominantly applied to the building improvement/diy warehouses such as Bunnings, Placemakers and Mitre 10 Mega, with store sizes in the range of 6,000-10,000m² (and up to 15,000m²), and requiring large sites of ha. The building improvement warehouse format is a relatively recent development, which has gathered strength in the past 8-10 years. Historically, there was a distinction between trade-based building and hardware outlets and retail outlets. Operations such as Bunnings and Mitre 10 had high shares of their custom coming from tradespeople in the construction sector (builders, plumbers, electricians and so on). However, the building improvement stores recognised that DIY is a significant component of the Kiwi culture, and both expanded their product range and adapted their warehouse space to be more attractive and accessible to the general public. Consequently, an increasing share of sales has been attracted from the retail sector ie DIY households as distinct from the wholesale sector, or those in the building trade. At the same time, the DIY market grew rapidly. This expansion of the market base has supported the shift toward larger outlets still operating in a semi-warehouse format, with associated yard area and garden centre. The major brands are all positioned as being single stop destinations for all building and home improvement needs, and so need to caters for a wide range of goods including bulky items. Hence the need for large floorspace, and convenience of drive through facilities for timber and other bulky DIY goods. Moreover, despite the expansion to cater for the retail or domestic consumers, these stores still have a substantial construction trade base, and must cater for that market as well - for warehousing and storage of bulky items such as building materials and timber, and access for trade vehicles as well as DIY customers with trailers. Shopping Malls are characterised by a mix of large outlets which acts as retail anchors and a wide range of smaller sized retail and personal services outlets. The key large tenants are 16

26 supermarkets and usually department stores, as well as variety stores and mini-majors in the apparel and appliances categories. Table 2.1 shows the size of a range of malls and large format retail centres throughout Auckland s metropolitan area, in terms of retail and total floorspace (includes offices and other administrative areas). Malls range in size from under 10,000 m² (Eastridge, Lynfield, Meadowbank and Mt Wellington) to 65,000 m² (Sylvia Park), although planned expansion of Westfield Albany will take that centre closer to 70,000 m². The 22 malls listed have an average size of 22,500 m². These comprehensive malls have attracted a substantial share of Auckland s retail growth in the past decade, through the establishment of new centres (Westfield Albany, Botany Downs and Sylvia Park) and the expansion of existing centres (for example, St Lukes and Glenfield). Shopping Centre/Mall North Shore City Table 2.1: Auckland Malls and LFR Centres (2007) Total Retail Space (m²) Total Centre Space (m²) Westfield Albany 45,301 56,886 Westfield Glenfield 30,373 31,142 Milford Shopping Centre 13,056 13,056 Westfield Shore City 13,989 14,813 Albany Mega Centre 35,879 35,879 Waitakere City Westgate Shopping Centre 35,301 45,221 Lincoln Centre 19,968 21,105 Westfield WestCity 32,253 36,853 Waitakere Mega Centre 17,062 17,065 LynnMall Shopping Centre 30,236 30,236 Auckland City Victoria Park Market 5,738 7,467 Westfield Downtown 12,404 15,119 Westfield 277 Newmarket 12,531 22,096 Westfield St Lukes 35,565 40,003 St Lukes Mega Centre 6,810 7,210 Three Kings Shopping Centre 9,515 10,025 Lynfield Shopping Centre 5,561 5,625 Royal Oak Mall 11,923 13,758 Dress-Smart Outlet Shopping Centre - Onehunga 12,451 12,453 Sylvia Park 58,500 65,200 Mt. Wellington Shopping Centre 8,905 8,905 Meadowbank Shopping Centre 6,318 7,030 Eastridge Shopping Centre 7,068 7,700 Manukau City Westfield Pakuranga 27,759 29,454 Westfield Manukau City 28,347 32,515 Manukau Supa Centa 43,856 45,095 Botany Town Centre 44,436 55,409 Mangere Town Centre 16,687 16,687 Source: Property Council Shopping Centre Database

27 The table also shows the substantial development of large format centres, with six centres averaging around 22,400 m², across the region. The list is not comprehensive. Nevertheless the table illustrates the key point, that the major share of retail growth has been directed to a centres structure, not only in response to planning conditions, but especially because most retail outlets benefit from co-locating with other retail, and so prefer to establish in centres. For the most part, where there is not sufficient zoned capacity, the developments which were out of zone or into general business zoned areas have been predominantly for grouping of retail outlets (ie centres) rather than stand alone stores. The main exceptions have been hardware and DIY outlets which can reasonably argue that they do not function well in the centres format, and most recently the Wairau Pak N Save, which has gained approval as a stand-alone supermarket in a business area. The decision on the Wairau store may increase pressure in future to allow supermarkets and other major core retail outlets to establish out of centre Demand Side On the demand side, there has been considerable growth in retail spend per household in real (inflation-adjusted) terms, and substantial population growth in some markets. Strong economic growth over the period to 2007, coupled with historically low interest rates and close to full employment saw average per household retail demand growth of more than 3% annually. This trend was enhanced by the strength of the New Zealand dollar (or more importantly, the weakness of the US dollar), meaning that the cost of imported retail goods declined in real terms. In addition to this, strong population growth, low interest rates, and high employment led to significant growth in house prices, which added to households feeling of being relatively wealthy. The combined effect has meant that overall, households significantly increased borrowings to fuel increased demand and to fund home ownership. As a result of strong demand pressures, both domestically and internationally (commodities demand driven by growth in China and India), pressures on prices to rise intensified, especially as oil prices began to soar. This flowed through to the retail sector at a lower rate overall than the economy as a whole, due to the reductions in real cost of imported goods and the switch towards imported goods over locally made goods. However food prices have risen sharply as have prices in the hospitality sector (cafe, restaurant, liquor and accommodation). The Reserve Bank responded by raising the Official Cash Rate (OCR) in an effort to restrict demand and reduce inflationary pressures. More recently, however, the global financial crisis has seen a slow-down in economic activity, and considerable reduction in consumer confidence, with consequent reduction in household consumption. 18

28 The result has been a significant contraction in the retail market in the short term, with expectations that the slow-down will continue well into 2010 especially if the New Zealand dollar depreciates against the US dollar (due to lack of confidence in the local economy to continue to produce recent returns primarily driven by the outlook of the Reserve Bank). The immediate outlook for retail demand is growth to be slower than household growth. However, the longer term expectation is for recovery and some increase in real spend at approximately 1% per household annually Supply Side Overview The main retail sector trends in the past decade have been: The emergence of large format retail, and associated location patterns for LFR; A greater focus on hospitality and service spend as households out-source more traditional roles (meal making, clothing and equipment repairs); A more mobile consumer market, as the costs of private transport have dropped in real terms in recent years, enabling longer travel distances for retail, and more independent tripmaking within households; A steady reduction in the relative importance of CBD roles as retail destinations. While CBD areas have continued to increase in size, growth has been relatively faster in the uppermiddle levels of the retail structure, especially the Sub-regional and Large Suburban centres. These centres have been large enough to attract investment and major stores, together with critical mass of smaller format retailers; This has coincided with the trend toward larger store sizes within the sector, enabling chains or individual outlets to serve larger markets, but also resulting in the market being served by fewer, larger outlets. These larger outlets have preferred to be part of larger centres, where they can co-locate with other substantial outlets, and their representation in smaller centres has diminished accordingly; A corresponding reduction in the retail goods roles of smaller centres. These have instead developed an increasing focus on convenience goods and hospitality role, as they can no longer realistically compete with the large malls and LFR centres for higher order goods which make up the bulk of the comparison retail sector; Emergence of stand-alone outlets, which can command large catchments and do not need to co-locate with other stores in order to generate enough custom to be viable. These have tended to seek cheap locations from which they can serve wide catchments, often favouring locations in business areas where land is cheaper, and /or locations on main arterial routes which enhance their ability to serve wide catchments; Internet and on-line sales taking a growing (albeit currently small) share of the market. 19

29 2.2 Large Format Retail On the supply side, a major trend has been the shift toward large format retail outlets. This trend follows international experience where the large format movement began at least 25 years ago in North America, followed by Europe and other developed economies. New Zealand has seen approximately 15 years of large format store development, led by the large discount supermarkets, department stores and Hardware/DIY retailers. A second trend, associated with the rise of LFR, has been the growing pressure to allow large retail stores to be developed as stand-alone or destinational outlets outside of the traditional town centre structure. Following the international pattern in the United States, Canada, United Kingdom and Australia, New Zealand has embraced the concept of Large Format Retail. Between 2000 and 2004 the average store size was estimated to have increased by 7%. Removing accommodation, cafes and restaurants from the equation sees retail stores increasing average size by 10% 7, which implies a significant influx of larger format stores LFR Thresholds Floorspace size is usually the sole basis of defining a retail store as large format. The operational aspects may vary, with large format stores predominantly, but not necessarily, having lower staffing intensity than smaller format stores. Nor are they all inclined to have display and storage within the one space although this is a primary characteristic of the larger supermarket operators and the Hardware/DIY operators. The definition of LFR varies, and there is no consistent level or boundary that defines LFR. In the retail development sector opinion varies, with 500 m² often quoted as the threshold. However, some development proposals, especially to serve smaller markets, have sought to have 300 m² as the definitional threshold. International definitions are equally diverse with definitions ranging widely across various jurisdictions in the United States, for example. For this study, a threshold of 500 m² has been adopted, in part because this aligns most closely with definitions applied in New Zealand. In terms of the distributions of store sizes, however, there is a reasonable case to consider retail floorspace of between 500 m² and 1,000 m² as medium format, with 1,000 m² as the appropriate threshold for LFR Economic Drivers Large format outlets have generally lower sales productivities ($ per m 2 per year) than medium and small format outlets, and lower employment intensity (EC or MEC per m 2 ). This has meant that land and building costs may be relatively more important in the economics of this type of retail 7 Reserve Bank of New Zealand: Bulletin, Vol. 68, No. 2, Page 37 20

30 development, with consequent pressure to establish in lower cost locations, particularly industrial or general business land, rather than within commercial zones where land costs are generally higher. This has the effect of minimising the investment required to establish a trading vehicle that has the potential to capture large volumes of spend within a given sector. There are a number of economic advantages driving the trend toward larger stores. While these types were initially those selling large or bulky items such as furniture, appliances and hardware, especially needing display areas, the advantages of large size are generic to many parts of the retail sector. These include: More display area Lower rental costs on a per m 2 basis Lower staffing costs per m 2 Less management or overhead per m 2 A wider range of goods on display However, there are a number of trade-offs as well. Larger stores require larger markets, and so have to draw customers over a longer distance than small stores. This means a tension between having the minimum number of outlets necessary to serve the market (and thereby minimising costs) and effectively serving the needs of customers within an acceptable travel distance while guarding against competitive threats. Moreover, larger stores require larger land areas, and this has helped drive the focus on business zoned areas where land is cheaper on a per m² basis, and often larger sites are available in one ownership. Further, the increases in logistical efficiency means that shop workers are able to sell and handle more goods per person than previously. As a consequence, shop staff can service larger floor areas than previously, and the floorspace per worker is likely to continue to increase. Over time a wide range of retail operations have adopted larger building footprints, including footwear (Number 1 Shoe Warehouse), sporting goods (Rebel Sports), jewellery (Michael Hill), and stationery (Warehouse Stationery) Patterns of LFR Growth LFR has developed in a variety of forms within the New Zealand context, including: Standalone LFR: When stores are large enough, and offer a wide range of goods, they are able to locate on individual sites in out of centre locations, without needing other stores to 21

31 help attract custom. Examples of these include: Smiths City, The Warehouse, Bunnings, and Mitre 10 Mega. Edge of centre/in-centre LFR: For smaller LFR stores that have a limited range of goods, they benefit from locating in existing centres with good pedestrian traffic. Other LFR stores, like department stores (such as Farmers, K-Mart etc) and supermarkets (such as Foodtown, New World etc) have traditionally located in centres or on the edge of centres. LFR complexes: For smaller LFR stores, co-locating alongside a more dominant LFR anchor store in a new LFR development can also be an attractive locational option. 2.3 Issues surrounding the emergence of LFR These economic drivers are not likely to diminish significantly in the future, and the trend toward large format outlets is expected to remain into the long term. It follows that if at least half the growth in total retail space, and around two-thirds of the space typical of retail in centres, is to be in large format stores, then it is essential to provide for these outlets as part of any centres-based urban form strategy Effects on Existing Centres The development of out-of-centre LFR and other retail can give rise to significant effects on in-centre retailers. For example, retailers who have not previously been represented in a catchment may be attracted to move into an area because these attributes are available at a new development, or retailers that are already present in a catchment may choose to relocate from their existing location. Stores remaining in existing centres may find it hard to compete with the LFR stores due to the cost benefits LFR retailers have from lower rentals. This can lead to a competitive response by in-centre retailers to allow them to offer a point of differentiation from LFR retailers, which may include increased marketing, becoming more specialised, or offering better service. The risk to existing centres is that if existing retailers choose to relocate to an out of centre LFR location the number of vacant stores can increase, and the range of goods and services offered from that centre may drop, encouraging lower numbers of people to visit the existing centre. This is a cyclic process, which can be hard to combat once it has begun, although the examples of such decay in New Zealand have been limited, largely by virtue of population growth increasing retail demand and allowing a wider range of retail locations to be supported. Despite there being very limited examples of a tumbleweed scale of impact in New Zealand, other less significant, but still detrimental impacts are more common. While stores vacated by a business leaving to set up in an LFR development may be re-tenanted, the new tenant may contribute much less to the centre s attractiveness. Lower amenity businesses such as second-hand, $2 shops, and 22

32 takeaway stores frequently move in to fill the gaps left by retailers leaving in-centre locations for out of centre LFR. These types of businesses are not as effective at attracting people into the centre, and the drop in foot traffic through the centre can have flow-on effects on the viability of other incentre businesses such as personal and community service providers and leisure and recreation activities. So when key shops move out of a town centre, there are not only direct impacts through loss of sales and customer numbers, but also indirect impacts on the vitality, vibrancy and amenity of the centre, and possibly an increase in security and safety issues. Because centres play an important role as a community s focal point, these impacts are strongly felt by the community. The cyclic nature of these impacts which first cause a decrease in vitality through reduced people activity can ultimately lead to declining viability of facilities and reduced investment in public facilities and infrastructure Urban Sustainability and Transport Effects Urban sustainability can be enhanced through efficient private vehicle travel, and is supported by concentrating retail activity in and around existing town centres. A centres based land use pattern makes it easier to provide effective and efficient public transport. This reduces the number and length of car journeys required by the community to meet their needs contributing to improved travel efficiency and sustainability. Large Format retail developments located out of established town centres contribute to urban sprawl. They locate outside of commercial areas, often on greenfield sites or in older industrial areas, because of their size and parking needs. Located on the periphery, public transport, walking and cycling are inefficient given their distance from residential areas. Most customers frequent the store using private motor vehicles, and a single large format store can generate significant single purpose vehicle trips per day. Traffic, and thus, congestion and air pollution, increases dramatically. Without question, the incremental development of large format destination stores has altered the dynamics of centres, from being one stop destinations in which all shops can comfortably be visited from a single car park location, to centres covering a large area with a number of mini-destinations within them. The total centre area becomes too big to be covered by a single stop shopping trip (as it is too far to walk), so precincts emerge around key destination shops. The grouping of convenience stores with LFR within an existing centre does not constitute the creation of a complete and competing centre, but does create a mini destination within the wider centre. Locating LFR adjacent to existing retail areas will optimise the potential for centre efficiency and cohesion, and for positive amenity outcomes. 23

33 Additionally, corridor based development can lead to the dispersal of retail activity, which generally makes for less efficient travel patterns because the opportunity for one-stop, multi-purpose shopping trips is reduced. Provision for public infrastructure also becomes less efficient. Corridor intensification does have a role to play in the sustainable management of urban growth and development. However, while corridor development should encompass a mix of activities including residential and employment, it should not include significant retail development beyond local convenience retail. It is important to make the distinction between convenience retail and service activity which serves local needs, and larger scale retail activity serving wider catchments than the immediate corridor. Generally, establishment of larger scale retail outlets along corridors represents a less efficient urban form than if that retail activity was located in centres, and supported by convenience retail along the corridors Other Economic Effects In addition non-centre locations pose additional costs for local authorities that are often subsidised by existing ratepayers. At the same time, large format stores attract additional growth to non centre locations, thus exacerbating the induced impact or secondary development effects. New businesses create costs for roads, police and fire services, and water and wastewater infrastructure. Ratepayers end up paying for the benefit of the retailer locating in their area, while all residents feel the impacts of the new store, particularly regarding increased traffic and declining town centres and central business districts. These impacts and their effects must be weighed up against the supposed benefits of increased choice and competition large format retail is claimed to foster. The economics of Large Format Retail stores affect the land use regime in a community by changing the demographics of, and employment within, the retail industry. The Faculty of Law & School of Environmental Studies, University of Victoria, Canada in association with Smart Growth British Colombia (2002) found the American experience was that; In the past fifteen years, large format stores have glutted the market with retail space, shifted commercial activity from central business districts to the suburban fringe, and captured a large percentage of regional markets at the expense of smaller local businesses in the downtown core. This has resulted in increased retail vacancies in the declining commercial town centres and fewer living wage jobs as opposed to part time or more casual jobs. Large Format retail stores do not create new markets or generate new household spend, they simply reallocate existing retail spend from local centres to non centre locations, along with the associated people activity. 24

34 Kenneth Stone, Iowa State University economist, studied the effect of superstores on small towns in Iowa and found that of the $20 million in sales generated by a new big box store, $11 million of that was captured from existing merchants 8. As retail sales shift to non centre large format retail stores and malls, a matching decline in central business area commercial activity and property values is experienced. A number of other US studies have found declines in downtown retail sales and property values by up to 30 percent after the development of suburban shopping malls. While this is a slightly different issue, the key theme is that non centre retail development generates impacts on established town centres and needs to be managed and controlled appropriately. However, there will not necessarily always be negative impacts on existing centres resulting from LFR developments establishing out of centre. Large format retail developments may provide a previously unavailable opportunity for a type of retail or a particular brand to enter a retail market. Many retail chains have specific site and store requirements such as building size and location, and if these are unavailable in centre, the only way the retailer will locate in a market is to locate out of centre. In such situations, the location of a new brand in an LFR development may stimulate the location of competitors in the same catchment, whether in or out of centre, offering consumers increased choice and stimulating local economic activity. Large format developments also offer retailers that have outgrown their in-centre premises the opportunity to move out to large premises on the fringe of, or further away from, the centre, potentially freeing up space for redevelopment of in-centre retail space. This redevelopment can lead to a rejuvenated centre with a new, broader range of small format stores. 2.4 International LFR Trends New Zealand planners can learn important lessons from international examples of LFR development and approaches to managing the effects of this retail growth. While stand alone LFR developments experienced a strong up-surge in demand initially in the United States, Canada and the United Kingdom, these are becoming less popular over time, and there is increasing demand for in-centre development, with examples of LFR retailers adapting from LFR stores in edge of centre/out-ofcentre locations to smaller stores in main street locations (for example Tescos in the UK). While the literature provides no strong explanation for the trends in the United States and Canada, it seems apparent that planners are driving the re-emergence of dominant town centres. The main drivers are: Smart growth and new urbanism, including master planned communities Recognition of the need to improve safety within existing town centres by increasing pedestrian movements 8 The Impact of Wal-Mart Stores on Other Businesses and Strategies for Co-Existing (1993) 25

35 Creating a place for community interaction, this is especially important for people who work from home or spend increasing amounts of time socialising on the internet. Creating urban entertainment and lifestyle centres, by enhancing the retail and cafe experience residents can be attracted to spend an entire day out shopping as a recreational activity. Town centres have an advantage over retail malls and LFR complexes by creating a space that can be used for a variety of activities throughout the day and night (24 hours, 7 days a week), whereas primarily retail precincts are only used during opening hours. The shift from out-of-centre to in-centre retail developments in the UK has been driven by centre protection policies mandated by central Government. These policies were developed in response to rapid growth of out-of town development in the 1980s, and by the 1990s there was recognition that the scale and location of new retail development was causing problems 9. The UK Government first introduced the town centres first emphasis in 1996 and reinforced these objectives in 2005 with stronger approaches to encouraging town centre development. UK data collection methods monitoring the number and size or retail developments, and location are good. This data showed that it took ten years for introduced Government policy to have an effect on the proportion of growth going to town centres; mainly because there is a delayed time of development after a consent has been issued for out of town developments. The key lesson is that relaxing policy produces a rapid reaction, since it is usually quicker to build on out-of-centre sites, but tightening policy takes a long time to have effect. Research showed that while some retailers had sought to conform to the new policies by adopting new formats, including small stores, going multi-storey, and taking advantage of edge of centre sites, some retailers were persisting in using strategies to develop in out-of-centre locations. Overall, the outlook for focussed town centre development looks promising, but commentators note that investor confidence is reliant on consistent planning direction. 2.5 Planning Mechanisms for LFR In New Zealand the main planning mechanism used to control the location of retail activity is land use zoning, accompanied by rules regarding the permitted activity types and floorspace thresholds. The most suitable way to plan for retail growth is to; i. understand emerging trends in LFR and retail overall ii. estimate the demand for new LFR floorspace over time in relation to population and economic growth 9 British Council of Shopping Centres, Future of Retail Property In Town or Out of Town. 26

36 iii. have zones and associated planning provisions which can appropriately cater for retail growth in relation to both scale and location. LFR, by its nature, requires significant amounts of space, both in terms of the stores themselves and in combination with the necessarily large, often single-purpose car parks required. This is not necessarily directly compatible with locations in the core of town centres, but given the significant detrimental impacts out of centre LFR developments can have on existing centres abilities to deliver amenity to populations, they should be enabled to establish in reasonable proximity to the core of centres, to complement rather than compete with the core activities. As discussed above, in the United Kingdom where the effects of out of centre LFR developments have played out over a much longer timeframe, Planning Policy Statement 6 lays out a set of guidelines and Policies that focused on the issue of sustainable development of England s town centres. This document and the Design Guidelines that accompany it present a process rather than a set of planning mechanisms that would ensure statutory authorities appropriately deal with all forms of retail development in a sustainable manner. These processes are equally applicable in the Auckland Regional context and apply to LFR. In essence the focus is placed on existing centres to cater for future needs wherever possible. This would strengthen existing centres and potentially lead to regeneration and redevelopment. A key difference between the UK examples and the Auckland experience is the ability of the UK authorities to purchase land, amalgamate holdings and drive development in a much more proactive manner. In order to manage retail development and LFR development local planning authorities should: actively promote growth and manage change in town centres; define a network and a hierarchy of centres each performing their appropriate role to meet the needs of their catchments; and adopt a proactive, plan-led approach to planning for town centres, through regional and local planning. Council needs to use tools such as District Plan Objectives and policies, area plans, and town centre strategies to address the transport, land assembly, planning and design issues associated with the growth and management of districts and centres. Only through comprehensive detailed understanding of how the entire retail framework operates are they able to appropriately provide for large format retail without endangering the significant community investment in established centres. These matters can be addressed through: 27

37 i. Assessing the need for additional retail development both in relation to the catchment it is intended to serve and in relation to retailing within the city or district overall; ii. Assessing the centres individual and aggregate capacity to accommodate future retail growth and development; iii. Ensuring that a comprehensive development planning approach is prepared in support of any new out of centre development, or edge of centre development; iv. Having an overarching urban strategy, and corresponding centre spatial and design strategy, within which the comprehensive development plan can be considered and assessed against (as to whether it supports and progresses or contradicts and inhibits); v. Consider the traffic, parking and transportation impacts and implications of the proposed development in light of the overall centre spatial strategy and other sustainable development objectives and policies Planning for Retail including LFR Wherever possible, growth should be accommodated by more efficient use of land and buildings within existing centres. Auckland City should aim to increase the density of development, where appropriate within existing centres. This is likely to require identification of sites suitable for development or redevelopment or where conversions and changes of use could be encouraged through the use of spot re-zonings. Council should also seek to ensure that the number and size of sites identified for development or redevelopment are sufficient to meet the scale and type of need identified. Where growth cannot be accommodated in identified existing centres, Council should plan for the extension of the primary shopping area of centres if there is a need for additional retail provision or, where appropriate, plan for the extension of the centre to accommodate other main centre uses (other commercial activities). Where extensions of shopping areas or town centres are proposed, these should be carefully integrated with the existing centre both in terms of design and to allow easy access on foot. Extension of the primary shopping area or town centre may also be appropriate where a need for LFR has been identified and this cannot be accommodated within the centre. LFR may deliver benefits for consumers and Council should seek to make provision for them in this context. In such cases, Council could identify, designate and assist LFR developers assemble larger sites adjoining the primary shopping area (i.e. in edge-of-centre locations) to facilitate in centre or edge of centre development rather than out of centre development. In areas of significant growth or where deficiencies are identified in the existing network of centres, new centres may be designated through the district plan process, with priority given to significantly under-supplied areas relative to demand. 28

38 Where existing centres are in decline, Council should assess the scope for consolidating and strengthening these centres by seeking to focus a wider range of services there, promote the diversification of uses and improve the environment. Where reversing decline is not possible, Council should recognise that these centres may need to be reclassified at a lower level within the hierarchy of centres, and reflect this revised status in the policies applied to the area. This may include allowing retail units to change to other uses, whilst aiming, wherever possible, to retain opportunities for vital local services, such as post offices and pharmacies. These processes are geared towards planning for all retail including LFR and may extend beyond the current remit of Councils economic development or planning activities. However, they represent a best practice guide to catering for retail growth and expansion LFR Specific Control Mechanisms Due to LFR s unique requirements and locational strategies, Council needs to ensure that the impacts and negative effects of LFR locating in non-centre locations are minimised. At a general level, this is best achieved by the combination of constraining LFR s ability to locate within other business zones, and also making reasonable provision for LFR to establish in and adjacent to existing centres. Currently Council has adopted a relatively permissive regime that has resulted in significant capacity available across the city. If it is not possible to alter these regulations, Council should look to ensure LFR developments looking to locate in these areas provide comprehensive assessment of effects on existing centres and show that they will not be in conflict with the objectives and policies of the District Plan which recognises that centres are resources to be protected and enhanced. Alternatively, Council could seek to impose a maximum amount of retail in any specific industrial location. This could be based on a % of total floorspace, or % of total zoned land within the industrial area. Finally, Council could consider a maximum footprint for any given retail outlet in the industrial areas. This would be used to discourage large format operators seeking these areas as relatively easy locations to develop within. With all of these measures Council needs to ensure it has carried out sufficient analysis and understands the retail market, the development opportunities within and adjacent to centres and likely growth futures for the city. 29

39 3 Auckland Region Retail Activity 3.1 Current Situation In 2006, the retail trade sector was the Region s second largest industry in employment terms, with some 84,780 MEC (Table 3.1). Gross output for the sector was $5,174m for Auckland Region, and value added some $3,191m, placing the sector as fourth largest in the regional economy (Table 3.2). Note that gross output differs from retail sales. Table 3.1: Auckland Region Employment by Top 10 Sectors, 2006 Employment 2006 Industry % Share of Modified % Share of Employment Auckland Region Employment Auckland Region Count Total Count Total Business services 93, % 112, % Retail trade 74, % 84, % Wholesale trade 57, % 61, % Health & community services 50, % 54, % Construction 33, % 48, % Cultural & recreational services 17, % 23, % Air transport, services to transport & storage 17, % 17, % Finance 14, % 14, % Real estate 6, % 14, % Communication services 11, % 13, % Source: EFM, Table 3.2: Auckland Region Output and Value Added by Top 10 Sectors, 2006 (EFM) Gross Output 2006 Value Added 2006 Industry % Share of % Share of $2004 million Auckland Region $2004 million Auckland Region Total Total Business services 11, % 6, % Wholesale trade 11, % 5, % Construction 6, % 2, % Retail trade 5, % 3, % Air transport, services to transport & storage 4, % 1, % Real estate 4, % 2, % Finance 3, % 3, % Communication services 3, % 2, % Health & community services 3, % 2, % Cultural & recreational services 3, % 1, % Source: EFM, Retail Sales In 2007 total regional retail sales were estimated at $19.8Bn, with an additional $3.1Bn of hardware DIY sales (Table 3.3). The region s retail sector accounted for 34% of national sales, though with higher shares in café and restaurant and apparel, and slightly lower shares in supermarket and department stores, reflecting the more diverse industry in the country s largest market. 30

40 Table 3.3: Auckland Region and National Retail Sales 2007 ($m) RETAIL TYPE Auckland Region Rest of NZ New Zealand Auckland Region Share % SUPERMARKETS $ 3,598 $ 7,565 $ 11,163 32% OTHER FOOD $ 1,329 $ 2,357 $ 3,686 36% CAFES & RESTAURANTS $ 1,826 $ 3,051 $ 4,877 37% DEPARTMENT STORES $ 1,035 $ 2,635 $ 3,670 28% APPAREL $ 1,092 $ 1,856 $ 2,949 37% FAH $ 1,950 $ 3,518 $ 5,468 36% OTHER RETAIL $ 3,071 $ 4,999 $ 8,070 38% HOUSEHOLD SERVICES $ 109 $ 217 $ % AUTOMOTIVE $ 5,749 $ 11,677 $ 17,425 33% TOTAL $ 19,759 $ 37,876 $ 57,635 34% HARDWARE & DIY $ 3,101 $ 6,322 $ 9,423 33% TOTAL inc HARDWARE $ 22,860 $ 44,198 $ 67,058 34% Source: Statistics NZ, Within the region, Auckland City accounts for the largest share (41%) of total retail sales, with substantial shares from Manukau City (20%) and North Shore City (18%) (Table 3.4). Retail sales are not simply shared pro rata within the region however. The apparel and café-restaurant sectors show significant concentration into Auckland City, consistent with the role of the regional CBD there, while the supermarket and department store sectors more closely match the distribution of the regional population. The retail sectors in the other TAs are more uniform in structure, apart from the relative under-representation of apparel and café-restaurant. The supermarket and department store sectors are relatively more significant in these other TAs. Note that the automotive and hardware-diy sectors account for 25% and 14% of regional sales respectively. These activities are predominantly located out of centre or edge of centre within the spatial economy. The food and grocery and comparison sectors, which account for 61% of total sales activity, are the main drivers of the centres structure within the economy. Excluding the automotive and hardware DIY sectors, food and grocery accounts for some 35% of sales, comparison retail accounts for 52%, and café-restaurant (including takeaways) the remaining 13%. 31

41 RETAIL TYPE Table 3.4: Auckland Region Retail Sales 2007 ($m) Rodney District North Shore City Waitakere City Auckland City Manukau City Papakura District Franklin District SALES SUPERMARKETS $ 224 $ 732 $ 498 $ 1,099 $ 731 $ 153 $ 162 $ 3,598 OTHER FOOD $ 83 $ 222 $ 164 $ 544 $ 252 $ 29 $ 46 $ 1,329 CAFES & RESTAURANTS $ 97 $ 240 $ 148 $ 918 $ 350 $ 41 $ 45 $ 1,826 DEPARTMENT STORES $ 37 $ 178 $ 163 $ 316 $ 296 $ 23 $ 21 $ 1,035 APPAREL $ 29 $ 172 $ 97 $ 559 $ 198 $ 22 $ 17 $ 1,092 FAH $ 61 $ 410 $ 217 $ 778 $ 369 $ 53 $ 63 $ 1,950 OTHER RETAIL $ 162 $ 496 $ 326 $ 1,309 $ 630 $ 75 $ 82 $ 3,071 HOUSEHOLD SERVICES $ 6 $ 18 $ 16 $ 46 $ 18 $ 3 $ 4 $ 109 AUTOMOTIVE $ 255 $ 1,016 $ 559 $ 2,446 $ 1,070 $ 209 $ 233 $ 5,749 TOTAL $ 954 $ 3,483 $ 2,188 $ 8,014 $ 3,914 $ 608 $ 672 $ 19,759 HARDWARE & DIY $ 130 $ 616 $ 264 $ 1,119 $ 792 $ 106 $ 81 $ 3,101 TOTAL inc HARDWARE $ 1,084 $ 4,100 $ 2,451 $ 9,133 $ 4,706 $ 713 $ 753 $ 22,860 SHARE % BY TA SUPERMARKETS 6% 20% 14% 31% 20% 4% 4% 100% OTHER FOOD 6% 17% 12% 41% 19% 2% 3% 100% CAFES & RESTAURANTS 5% 13% 8% 50% 19% 2% 2% 100% DEPARTMENT STORES 4% 17% 16% 31% 29% 2% 2% 100% APPAREL 3% 16% 9% 51% 18% 2% 2% 100% FAH 3% 21% 11% 40% 19% 3% 3% 100% OTHER RETAIL 5% 16% 11% 43% 21% 2% 3% 100% HOUSEHOLD SERVICES 5% 16% 15% 42% 16% 3% 3% 100% AUTOMOTIVE 4% 18% 10% 43% 19% 4% 4% 100% TOTAL 5% 18% 11% 41% 20% 3% 3% 100% HARDWARE & DIY 4% 20% 8% 36% 26% 3% 3% 100% TOTAL inc HARDWARE 5% 18% 11% 40% 21% 3% 3% 100% TA STRUCTURE SUPERMARKETS 21% 18% 20% 12% 16% 21% 21% 16% OTHER FOOD 8% 5% 7% 6% 5% 4% 6% 6% CAFES & RESTAURANTS 9% 6% 6% 10% 7% 6% 6% 8% DEPARTMENT STORES 3% 4% 7% 3% 6% 3% 3% 5% APPAREL 3% 4% 4% 6% 4% 3% 2% 5% FAH 6% 10% 9% 9% 8% 7% 8% 9% OTHER RETAIL 15% 12% 13% 14% 13% 11% 11% 13% HOUSEHOLD SERVICES 1% 0% 1% 0% 0% 0% 0% 0% AUTOMOTIVE 24% 25% 23% 27% 23% 29% 31% 25% TOTAL 88% 85% 89% 88% 83% 85% 89% 86% HARDWARE & DIY 12% 15% 11% 12% 17% 15% 11% 14% TOTAL inc HARDWARE 100% 100% 100% 100% 100% 100% 100% 100% Source: Statistics NZ, 2008; RSDM, REGION Retail Employment The MEC data shows total employment of 107,980 in the retail sector, with a further 7,570 in the hardware-diy sector (Table 3.5). The employment structure across the region differs from the sales pattern because of substantial differences in sales productivity per person between different types of retail activity. 32

42 RETAIL TYPE Table 3.5: Auckland Region Retail Employment (MEC), 2007 Rodney District North Shore City Waitakere City Auckland City Manukau City Papakura District Franklin District EMPLOYMENT (MEC) SUPERMARKETS 840 2,730 1,860 4,100 2, ,420 OTHER FOOD 480 1, ,070 1, ,660 CAFES & RESTAURANTS 1,640 4,050 2,450 15,460 5, ,670 DEPARTMENT STORES ,520 1, ,960 APPAREL 240 1, ,560 1, ,880 FAH 260 1, ,980 1, ,540 OTHER RETAIL 860 2,820 1,790 7,430 3, ,250 HOUSEHOLD SERVICES ,160 AUTOMOTIVE 880 2,780 1,840 6,450 3, ,440 TOTAL 5,440 17,690 11,500 46,050 21,380 3,070 3, ,980 HARDWARE & DIY 310 1, ,790 1, ,570 TOTAL inc HARDWARE 5,750 19,200 12,130 48,840 23,290 3,320 3, ,550 SUPERMARKETS 6% 20% 14% SHARE % BY TA 31% 20% 4% 4% 100% OTHER FOOD 6% 18% 12% 40% 19% 2% 3% 100% CAFES & RESTAURANTS 5% 13% 8% 50% 19% 2% 2% 100% DEPARTMENT STORES 4% 17% 16% 31% 29% 2% 2% 100% APPAREL 3% 16% 9% 51% 18% 2% 2% 100% FAH 3% 20% 12% 40% 19% 3% 3% 100% OTHER RETAIL 5% 16% 10% 43% 20% 3% 3% 100% HOUSEHOLD SERVICES 5% 16% 15% 41% 16% 3% 3% 100% AUTOMOTIVE 5% 17% 11% 39% 20% 4% 5% 100% TOTAL 5% 16% 11% 43% 20% 3% 3% 100% HARDWARE & DIY 4% 20% 8% 37% 25% 3% 3% 100% TOTAL inc HARDWARE 5% 17% 10% 42% 20% 3% 3% 100% TA STRUCTURE SUPERMARKETS 15% 14% 15% 8% 12% 17% 17% 12% OTHER FOOD 8% 7% 8% 6% 6% 5% 7% 7% CAFES & RESTAURANTS 29% 21% 20% 32% 25% 21% 21% 27% DEPARTMENT STORES 3% 4% 6% 3% 6% 3% 3% 4% APPAREL 4% 7% 6% 9% 7% 5% 4% 8% FAH 5% 8% 7% 6% 6% 7% 7% 7% OTHER RETAIL 15% 15% 15% 15% 15% 14% 12% 15% HOUSEHOLD SERVICES 1% 1% 1% 1% 1% 1% 1% 1% AUTOMOTIVE 15% 14% 15% 13% 14% 19% 21% 14% TOTAL 95% 92% 95% 94% 92% 92% 94% 93% HARDWARE & DIY 5% 8% 5% 6% 8% 8% 6% 7% TOTAL inc HARDWARE 100% 100% 100% 100% 100% 100% 100% 100% REGION Source: Statistics NZ, 2008; RSDM, As with sales, Auckland City has the largest share of employment (43%), more than twice as much as Manukau City (20%), and ahead of North Shore City (16%) and Waitakere City (11%). Within the retail sector, cafes-restaurant activity accounts for the largest share of employment (27%), well ahead of food and grocery (19%) and close to comparison retail (34%). However, the cafe-restaurant sector is characterised by part time and casual employment, with the average hours worked less than for other retail activities Retail Floorspace There is an estimated 2,785,000 m 2 of retail floorspace in the Auckland Region (June 2007), based on the recorded employment levels, and sales levels (Table 3.6). In addition, there is an estimated 547,000 m 2 of floorspace in the hardware-diy sector, for a regional total of 3,332,000 m 2 (or 2,673,000 m 2 excluding automotive). 33

43 RETAIL TYPE Rodney District Table 3.6: Auckland Region Floorspace (GFA), 2007 North Shore City Waitakere City Auckland City Manukau City FLOORSPACE (SQM, GFA) Papakura District Franklin District SUPERMARKETS 17,000 56,000 38,000 84,000 56,000 12,000 12, ,000 OTHER FOOD 8,000 22,000 16,000 53,000 25,000 3,000 4, ,000 CAFES & RESTAURANTS 19,000 46,000 28, ,000 67,000 8,000 9, ,000 DEPARTMENT STORES 8,000 40,000 37,000 71,000 66,000 5,000 5, ,000 APPAREL 7,000 38,000 22, ,000 44,000 5,000 4, ,000 FAH 13,000 79,000 43, ,000 74,000 10,000 13, ,000 OTHER RETAIL 24,000 78,000 48, ,000 96,000 12,000 12, ,000 HOUSEHOLD SERVICES 1,000 4,000 3,000 9,000 4,000 1,000 1,000 23,000 AUTOMOTIVE 32, ,000 68, , ,000 25,000 28, ,000 TOTAL 129, , ,000 1,151, ,000 81,000 88,000 2,785,000 HARDWARE & DIY 22, ,000 46, , ,000 18,000 14, ,000 TOTAL inc HARDWARE 151, , ,000 1,352, ,000 99, ,000 3,332,000 SHARE % BY TA SUPERMARKETS 6% 20% 14% 31% 20% 4% 4% 100% OTHER FOOD 6% 17% 12% 40% 19% 2% 3% 100% CAFES & RESTAURANTS 5% 13% 8% 50% 19% 2% 3% 100% DEPARTMENT STORES 3% 17% 16% 31% 28% 2% 2% 100% APPAREL 3% 16% 9% 51% 18% 2% 2% 100% FAH 3% 20% 11% 41% 19% 3% 3% 100% OTHER RETAIL 5% 16% 10% 43% 20% 3% 3% 100% HOUSEHOLD SERVICES 4% 17% 13% 39% 17% 4% 4% 100% AUTOMOTIVE 5% 17% 10% 41% 19% 4% 4% 100% TOTAL 5% 17% 11% 41% 20% 3% 3% 100% HARDWARE & DIY 4% 20% 8% 37% 25% 3% 3% 100% TOTAL inc HARDWARE 5% 18% 10% 41% 21% 3% 3% 100% TA STRUCTURE SUPERMARKETS 11% 10% 11% 6% 8% 12% 12% 8% OTHER FOOD 5% 4% 5% 4% 4% 3% 4% 4% CAFES & RESTAURANTS 13% 8% 8% 13% 10% 8% 9% 11% DEPARTMENT STORES 5% 7% 11% 5% 10% 5% 5% 7% APPAREL 5% 6% 6% 9% 6% 5% 4% 7% FAH 9% 14% 12% 12% 11% 10% 13% 12% OTHER RETAIL 16% 13% 14% 15% 14% 12% 12% 14% HOUSEHOLD SERVICES 1% 1% 1% 1% 1% 1% 1% 1% AUTOMOTIVE 21% 19% 19% 20% 18% 25% 27% 20% TOTAL 85% 81% 87% 85% 80% 82% 86% 84% HARDWARE & DIY 15% 19% 13% 15% 20% 18% 14% 16% TOTAL inc HARDWARE 100% 100% 100% 100% 100% 100% 100% 100% Source: RSDM, REGION The PropertyIQ data indicates some 3,300,000 m 2 of retail floorspace for the region, excluding automotive, or around 650,000 m 2 more floorspace than these estimates. However, the PropertyIQ retail premises category includes a range of service activities which typically occupy retail space, such as video stores, hairdressers, travel agencies, drycleaners and so on. These are not included in the Table 3.6 estimates, but at the regional level occupy an estimated 600,000 m 2 of floorspace, which suggests reasonable compatibility between the floorspace estimates for this study, and the PropertyIQ data 10. The retail floorspace includes 406,000 m 2 of food and grocery floorspace, 357,000 m 2 of caferestaurant space, and 1,340,000 m 2 of comparison retail space. These levels of floorspace supply are 10 Note, because the PropertyIQ and ANZSIC activity categories are not directly comparable, and the PropertyIQ statistics are the aggregate of buildings which may include a range of business activities, then it is not possible to achieve a full reconciliation of the figures 34

44 Total Retail Small Format Retail Large Format Retail close to, but lower than, national average floorspace supply on a per household basis. This reflects the generally higher sales productivity levels by the Auckland retail sector ($ per m 2 per year), and the generally higher floorspace costs for outlets in the Auckland market Large Format Retail Floorspace The retail types which are characteristically large format account for a substantial share of the regional total, with supermarkets (271,000 m 2 ), department stores (232,000 m 2 ), and furniture, appliances and hardware (192,000 m 2 ). A significant share of automotive space is also large format. Overall, LFR accounts for an estimated 40% of the floorspace (Table 3.7), or 1,134,000 m 2. The figures in the table show the estimated LFR and SFR floorspace by retail type and TA, using 500 m 2 as the threshold for defining large format outlets. The floorspace for each TA and retail type has been estimated from detailed (mesh-block) data according to the numbers of outlets of each size (MEC based) and applying regional average floorspace per MEC figures. Table 3.7: Auckland Region LFR and SFR Retail Floorspace (m 2 ), 2007 TA Supermarkets Other Food Cafes & Restaurants Department Stores Apparel FAH Other Household Services Automotive Total Share % Rodney 17,000 1,000-8,000-3,000 2,000-5,000 36,000 28% North Shore 56,000 2,000 1,000 40,000 3,000 37,000 11,000 1,000 48, ,000 42% Waitakere 37,000-2,000 37,000 1,000 26,000 8,000-15, ,000 42% Auckland 82,000 3,000 34,000 71,000 9,000 78,000 41,000 2, , ,000 39% Manukau 55,000 2,000 15,000 66,000 10,000 35,000 27,000-40, ,000 45% Papakura 12,000-1,000 5,000 2,000 6,000 2,000-9,000 37,000 46% Franklin 12,000 1,000 1,000 5,000 1,000 7, ,000 36,000 41% Auckland Region 271,000 9,000 54, ,000 26, ,000 91,000 3, ,000 1,134,000 41% Rodney - 7,000 19,000-7,000 10,000 22,000 1,000 27,000 93,000 72% North Shore - 20,000 45,000-35,000 42,000 67,000 3,000 65, ,000 58% Waitakere 1,000 16,000 26,000-21,000 17,000 40,000 3,000 53, ,000 58% Auckland 2,000 50, , ,000 80, ,000 7, , ,000 61% Manukau 1,000 23,000 52,000-34,000 39,000 69,000 4,000 85, ,000 55% Papakura - 3,000 7,000-3,000 4,000 10,000 1,000 16,000 44,000 54% Franklin - 3,000 8,000-3,000 6,000 12,000 1,000 19,000 52,000 59% Auckland Region 4, , , , , ,000 20, ,000 1,651,000 59% Rodney 17,000 8,000 19,000 8,000 7,000 13,000 24,000 1,000 32, , % North Shore 56,000 22,000 46,000 40,000 38,000 79,000 78,000 4, , , % Waitakere 38,000 16,000 28,000 37,000 22,000 43,000 48,000 3,000 68, , % Auckland 84,000 53, ,000 71, , , ,000 9, ,000 1,151, % Manukau 56,000 25,000 67,000 66,000 44,000 74,000 96,000 4, , , % Papakura 12,000 3,000 8,000 5,000 5,000 10,000 12,000 1,000 25,000 81, % Franklin 12,000 4,000 9,000 5,000 4,000 13,000 12,000 1,000 28,000 88, % Auckland Region 275, , , , , , ,000 23, ,000 2,785, % LFR Share 99% 7% 15% 100% 11% 49% 19% 13% 39% 41% Source: RSDM, The share of large format space varies considerably across the different retail types. Department stores and supermarkets are almost entirely LFR, while the appliances, furniture and hardware category has an estimated 49% in LFR. However, the remaining retail categories of Other Food (7%), Apparel (11%) and Other Retail (19%) have substantially lower LFR shares, as do household services (13%). 35

45 The proportions of LFR space vary also by local authority area in Auckland. The smaller economies (Rodney and Franklin Districts) have slightly lower shares in LFR, mainly because their populations are more geographically dispersed, with smaller markets served by individual outlets. Auckland City also has an overall share slightly below the regional average. However, this reflects the retail structure, especially the relative concentration of the apparel and cafe-restaurant sectors in Auckland, both of which are characterised by small format rather than LFR outlets. The main suburban TAs North Shore, Waitakere, Manukau, Papakura all have higher shares of retail in LFR format, reflecting the retail structure and the dominance of sub-regional, large suburban and suburban centres in their retail supply structure. Nonetheless, LFR accounts for a substantial share of total retail across all parts of the regional economy. 3.2 Emerging Trends - Retail and LFR Changes The growth in retail employment recorded by Statistics NZ indicates a substantial increase in floorspace since In total, retail sector employment grew by 22%, with an additional 17,680 persons engaged by However, the estimated growth in LFR employment was slower than the total growth, at 9% compared with 31% for SFR. In part, this was due to the rapid growth in the caferestaurant and apparel sectors with their generally smaller store sizes. Nevertheless, the net increase in department store and supermarket employment was relatively low, while growth in the furniture, appliances and homeware sector was as rapid in the SFR category as in the LFR. Table 3.8: Auckland Region Retail Employment Change (MEC) RETAIL TYPE % LFR Supermarkets % Other Food % Cafes & Restaurants % Department Stores % Apparel % FAH % Other % Household Services % Automotive % Total % SFR Supermarkets % Other Food % Cafes & Restaurants % Department Stores % Apparel % FAH % Other % Household Services % Automotive % Total % TOTAL % Source: Statistics NZ, 2008; RSDM,

46 The employment data suggests that total retail floorspace in Auckland Region has increased by around 359,000 m 2 in the period However, the 2001 floorspace estimate is based on the 2001 employment statistics, and assumes that the floorspace per person engaged has not changed in the period. It is likely that there have also been shifts in employment intensity over the period (that is, floorspace per person engaged), which would mean that the actual growth in floorspace may have differed from the growth in employment. Nevertheless, without comprehensive floorspace data being collected, the employment-based estimates (together with GU data) provide the most accurate indication of floorspace growth. The figures show an increase of 359,000 m 2 of floorspace, from 2,426,000 m 2 in 2001 to 2,785,000 m 2 in This indicates an annual average increase of nearly 60,000m 2. In the period, total LFR floorspace has increased by an estimated 92,000 m 2 to 1,134,000 m 2 by At the same time, SFR floorspace has grown more rapidly by around 266,000 m 2 to reach 1,651,000 m 2 in The LFR share has reduced from 43% of the total space in 2001 to 41% in The largest increases in LFR have occurred in Auckland City (42,000m 2 ) and North Shore City (32,000m 2 ). Of the main LFR types, growth in bulky goods accounted for 66% of LFR floorspace growth, with supermarkets accounting for a further 14% of floorspace growth (Appendix 3). Table 3.9: Auckland Region Retail Floorspace (m 2 ), 2001 and 2007 TA Change LFR SFR Total LFR SFR Total LFR SFR Total Rodney 34,000 75, ,000 36,000 93, ,000 2,000 18,000 20,000 North Shore 167, , , , , ,000 32,000 36,000 68,000 Waitakere 129, , , , , ,000-3,000 26,000 23,000 Auckland 408, ,000 1,019, , ,000 1,151,000 42,000 90, ,000 Manukau 242, , , , , ,000 8,000 75,000 83,000 Papakura 34,000 39,000 72,000 37,000 44,000 81,000 3,000 5,000 9,000 Franklin 28,000 36,000 64,000 36,000 52,000 88,000 8,000 16,000 24,000 Auckland Region 1,042,000 1,385,000 2,426,000 1,134,000 1,651,000 2,785,000 92, , ,000 Source: Statistics NZ, 2008; RSDM, Retail Demand Retail Demand compared with Retail Supply The retail demand and supply (employment and floorspace) data also highlights the structure of the retail sector within the region. Two aspects are important. First, the Auckland Region retail sector serves both demand arising within the Auckland Region (from resident households, businesses and tourism), and demand from adjacent regions. Therefore, the level of sales and floorspace within the region is greater than would be sustained by the regional demand alone, and this is expected to continue into the long term. 37

47 Second, retail activity is not distributed evenly within the region. There is a disproportionately high level of sales and floorspace in Auckland City, because it contains the region s CBD, is the largest focus of business activity (especially commercial and services), and is the focus of tourism activity. These features are shown in Table 3.10 which provides a summary of floorspace demand and supply by TA within Auckland Region for The supply estimates show the situation for each TA, for aggregate retail types (food and grocery, comparison [including services], cafe-restaurant, automotive and hardware-diy). The demand estimates show the comparable sustainable floorspace, according to the market size in each location, and estimated sales productivity. Overall, the Region has a floorspace supply larger than demand in the order of 38-40,000 m 2 for food and grocery and comparison retail, or around 2%. However, this figure is indicative, because the Auckland retail sector has net inflows of demand which sustain additional floorspace but also has higher sales productivity levels, which means less floorspace per $m of demand. There is also an apparent supply surplus of over 35,000 m 2 for the cafe-restaurant sector, although it is not clear as to the degree that this is due to different consumption patterns in the Auckland market, rather than any net inflow of spend from adjacent regions. The demand and supply figures also indicate surplus of 55,000 m 2 (9%) for automotive and 29,000 m 2 (5.5%) for hardware-diy. Overall, the regional floorspace supply is around 146,000 m 2 greater than regional demand (4%), or around 110,000 m 2 excluding the cafe-restaurant sector. There are also retail spending flows evident within the Auckland region, as the demand and supply patterns are not identical. Total floorspace supply in Auckland City is considerably greater than demand (around 17%), reflecting its role as the regional CBD, and tourism focus, as well as a major destination for shoppers from Waikato and Northland. Because of Auckland City s major role in the region, drawing retail spend from other TAs, the apparent net surplus is not a real oversupply. North Shore City also has a high level of floorspace relative to demand, although its retail sector also has a role in servicing demand from neighbouring Rodney District and, to a lesser extent, Waitakere City. Rodney District, Franklin District and Waitakere City floorspace levels all indicate substantial net outflows of retail spending. 38

48 RETAIL TYPE Table 3.10: Auckland Region Retail Floorspace Demand and Supply 2007 Rodney District North Shore City Waitakere City Auckland City Manukau City SUPPLY 2007 Papakura District Franklin District FOOD & GROCERY 25,000 78,000 54, ,000 81,000 15,000 16, ,000 COMPARISON RETAIL 53, , , , ,000 33,000 35,000 1,363,000 CAFES & RESTAURANTS 19,000 46,000 28, ,000 67,000 8,000 9, ,000 SUB-TOTAL 97, , , , ,000 56,000 60,000 2,126,000 AUTOMOTIVE 32, ,000 68, , ,000 25,000 28, ,000 HARDWARE DIY 22, ,000 46, , ,000 18,000 14, ,000 TOTAL 151, , ,000 1,352, ,000 99, ,000 3,332,000 DEMAND 2007 FOOD & GROCERY 28,000 65,000 54, ,000 91,000 13,000 18, ,000 COMPARISON RETAIL 90, , , , ,000 40,000 59,000 1,326,000 CAFES & RESTAURANTS 19,000 45,000 35, ,000 65,000 9,000 15, ,000 SUB-TOTAL 137, , , , ,000 62,000 92,000 2,052,000 AUTOMOTIVE 39,000 95,000 73, , ,000 18,000 26, ,000 HARDWARE DIY 45,000 82,000 67, , ,000 22,000 24, ,000 TOTAL 221, , ,000 1,140, , , ,000 3,186,000 NET FOOD & GROCERY - 3,000 13,000-1,000-10,000 2,000-2,000 1,000 COMPARISON RETAIL - 37,000 27,000-17, ,000-11,000-7,000-24,000 37,000 CAFES & RESTAURANTS - 1,000-7,000 47,000 2,000-1,000-6,000 36,000 SUB-TOTAL - 40,000 41,000-24, ,000-19,000-6,000-32,000 74,000 AUTOMOTIVE - 7,000 18,000-5,000 43,000-4,000 7,000 2,000 54,000 HARDWARE DIY - 23,000 27,000-21,000 15,000 34,000-4,000-10,000 18,000 TOTAL - 70,000 86,000-50, ,000 11,000-3,000-40, ,000 REGION Source: Statistics NZ, 2008; RSDM, Future Retail Demand Key issues in making planning provision for retail activity are the scale, nature and location of future retail growth. In particular, the scale of future growth in large format retail outlets is critical, because of the land and other requirements of this type of retailing. Basis of Retail Growth Projections Retail demand growth is driven mainly by increases in population and household numbers, together with changes in spending levels per household. Growth in tourism and business activity also drives retail growth, though accounting for relatively small shares of total demand. Increases in demand ($m of spend) do not translate directly into the same scale of increase in floorspace or retail employment, as noted earlier (Section 2). Long term gains in retail sector efficiency mean that sales per person engaged are likely to increase in real terms, while floorspace productivity (sales per m 2 per year) will also improve, as they have done in the past. This means that for any percentage increase in demand, there is likely to be a lesser increase in floorspace. The projections of retail demand and floorspace produced in this study draw on projections of population and household growth, tourism and business growth, and estimates of annual real growth in spending per household, and gains in floorspace productivity. Over a long time period, estimates (assumptions) about growth rates have important effects on total projected growth, because they compound over the period. For example, a growth rate of 1% in average spend per household (the base projection applied here) compounds to a 21% increase over the

49 period. Therefore, it is important to understand the estimates which underpin the growth projections, and how future outcomes may be different if the rates of household spending growth and floorspace productivity growth were to vary from those applied. For the assessment of future retail demand and floorspace needs, the core projections are: Medium (Base) Medium population and household projections (Statistics NZ), 1% annual increase in real spend per household compounding , 0.5% annual increase in floorspace productivity, employment and business growth at the same rate as population growth, and tourism growth as per Ministry of Tourism (2007) forecasts; High High population and household projections (Statistics NZ), other growth as per the Base projection; Low Low population and household projections (Statistics NZ), other growth as per the Base projection; Regional Retail Demand Growth to 2026 The Auckland Region retail market is expected to grow substantially over the period to The combined effects of household, business and tourism growth, as well as greater spend per household, will see the retail market growing by some $15.2Bn in annual spend over the period, from the current $20.8Bn to $36Bn in 2026 (Table 3.11). This includes all retail, as well as hardware- DIY spend. The projected growth excluding automotive and hardware-diy is $9.5Bn over the period. In the short term (the period to 2011) total projected growth is $2.7Bn, or $1.7Bn excluding automotive and hardware-diy. This represents annual demand growth in the order of $675m, or $245m excluding automotive and hardware-diy (Table 3.11). In the medium term (the period to 2016) total projected growth is $6.5Bn, or $4.0Bn, excluding automotive and hardware-diy. By 2016, the total market would be 31% larger than in 2007, and 73% larger by Key features of the retail demand growth include: i. Supermarket growth of $1,017m by 2016 and $2,401m by This growth equates to an annual average increase of $113m to 2016, and $126m per year until 2026; ii. Other food and grocery growth of $385m by 2016 and $909m by 2026, equating to an annual average increase of $43m to 2016, and $48m per year until 2026; iii. Café-restaurant-takeaway growth of $582m by 2016 and $1,375m by This equates to an annual average increase of $65m to 2016, and $72m per year until 2026; iv. Department store growth of $269m by 2016 and $633m by This represents annual average increases of $30m to 2016, and $33m until 2026; v. Apparel store growth of $329m by 2016 and $778m by 2026, equating to annual average increases of $37m to 2016, and $41m to 2026; 40

50 vi. vii. viii. ix. Furniture, Appliances and Homewares (FAH) growth of $557m by 2016 and $1,315m by 2026, an annual average increase of $62m to 2016, and $69m per year until 2026; Other Retail growth of $876m by 2016 and $2,069m by This represents annual average increases of $97m to 2016, and $109m until 2026; Automotive growth of $1,582m by 2016 and $3,691m by 2026, equating to an annual average increase of $176m to 2016, and $194m until 2026; Hardware-DIY growth of $831m by 2016 and $1,914m by 2026, with annual average increases of $92m to 2016, and $101m until Growth in Average Spend Levels This growth would be mainly based on household and business growth. Over the period to 2016, around two-thirds of the demand growth arises from the projected increase in households, tourists and business activity, with the other one-third arising from the increase in real spend per household or per visitor. Longer term, the influence of increases in average spend levels progressively increases, though by 2026 it still accounts for only two-fifths of the total growth. High and Low Futures The High growth future would see stronger demand growth, some $0.8Bn more by 2016, and $2.0Bn more by That future would see a total market of $28.1Bn by 2016 ($17.9Bn excluding automotive and hardware-diy) and $38.0Bn by 2026 ($23.6Bn excluding automotive and hardware- DIY) (Table 3.11). The Auckland retail sector would be 35% larger by 2016, and 82% by The Low growth future would see less rapid demand growth, some $0.8Bn less than the Medium future by 2016, and $2.0Bn less by The Low growth future would still see a total market of $26.5Bn by 2016 ($16.1Bn excluding automotive and hardware-diy) and $34.0Bn by 2026 ($20.7Bn excluding automotive and hardware-diy). The sector would be 27% larger by 2016, 63% by Regional Inflows These demand growth estimates are based on population and economic growth within Auckland Region, and do not include demand from adjacent regions, which currently accounts for around 5% of total regional sales. The net inflow is expected to grow in $ terms but decrease in percentage terms over time. Auckland has generally faster growth than other regions, while the market growth in other regions should see their retail sectors expand and become more self-sufficient. Thus, by 2026 the proportion of Auckland sales which arise in other regions is expected to be less than 4%. Put another way, the demand figures presented in Table 3.11 would be 3-4% higher if allowance was made for net inflows of spending from other regions. 41

51 Table 3.11: Auckland Region Retail Demand ($m) RETAIL TYPE MEDIUM SUPERMARKETS $ 3,333 $ 3,754 $ 4,350 $ 5,010 $ 5,734 $ 421 $ 1,017 $ 1,677 $ 2,401 31% 72% OTHER FOOD $ 1,264 $ 1,423 $ 1,648 $ 1,898 $ 2,172 $ 159 $ 385 $ 634 $ % 72% CAFES & RESTAURANTS $ 1,442 $ 1,692 $ 2,024 $ 2,397 $ 2,817 $ 251 $ 582 $ 956 $ 1,375 40% 95% DEPARTMENT STORES $ 904 $ 1,015 $ 1,172 $ 1,346 $ 1,537 $ 111 $ 269 $ 443 $ % 70% APPAREL $ 959 $ 1,097 $ 1,288 $ 1,501 $ 1,737 $ 138 $ 329 $ 542 $ % 81% FAH $ 1,859 $ 2,089 $ 2,416 $ 2,778 $ 3,174 $ 230 $ 557 $ 919 $ 1,315 30% 71% OTHER RETAIL $ 2,738 $ 3,103 $ 3,614 $ 4,181 $ 4,807 $ 366 $ 876 $ 1,444 $ 2,069 32% 76% HOUSEHOLD SERVICES $ 107 $ 120 $ 139 $ 160 $ 182 $ 13 $ 32 $ 53 $ 75 30% 70% AUTOMOTIVE $ 5,355 $ 6,017 $ 6,938 $ 7,950 $ 9,046 $ 662 $ 1,582 $ 2,594 $ 3,691 30% 69% TOTAL $ 17,960 $ 20,312 $ 23,590 $ 27,220 $ 31,206 $ 2,351 $ 5,630 $ 9,260 $ 13,246 31% 74% HARDWARE & DIY $ 2,891 $ 3,241 $ 3,721 $ 4,246 $ 4,805 $ 350 $ 831 $ 1,356 $ 1,914 29% 66% TOTAL inc HARDWARE $ 20,851 $ 23,553 $ 27,312 $ 31,466 $ 36,011 $ 2,702 $ 6,461 $ 10,615 $ 15,160 31% 73% RETAIL TYPE HIGH GROWTH SUPERMARKETS $ 3,333 $ 3,833 $ 4,515 $ 5,276 $ 6,124 $ 500 $ 1,182 $ 1,943 $ 2,791 35% 84% OTHER FOOD $ 1,264 $ 1,453 $ 1,711 $ 1,999 $ 2,320 $ 189 $ 447 $ 735 $ 1,056 35% 84% CAFES & RESTAURANTS $ 1,442 $ 1,711 $ 2,067 $ 2,471 $ 2,939 $ 269 $ 625 $ 1,030 $ 1,498 43% 104% DEPARTMENT STORES $ 904 $ 1,035 $ 1,216 $ 1,416 $ 1,639 $ 132 $ 312 $ 513 $ % 81% APPAREL $ 959 $ 1,115 $ 1,326 $ 1,563 $ 1,833 $ 156 $ 367 $ 604 $ % 91% FAH $ 1,859 $ 2,133 $ 2,509 $ 2,927 $ 3,391 $ 274 $ 649 $ 1,068 $ 1,531 35% 82% OTHER RETAIL $ 2,738 $ 3,162 $ 3,739 $ 4,385 $ 5,110 $ 424 $ 1,001 $ 1,647 $ 2,372 37% 87% HOUSEHOLD SERVICES $ 107 $ 123 $ 145 $ 169 $ 195 $ 16 $ 37 $ 61 $ 88 35% 82% AUTOMOTIVE $ 5,355 $ 6,103 $ 7,119 $ 8,244 $ 9,478 $ 748 $ 1,763 $ 2,888 $ 4,123 33% 77% TOTAL $ 17,960 $ 20,668 $ 24,345 $ 28,449 $ 33,029 $ 2,707 $ 6,385 $ 10,489 $ 15,068 36% 84% HARDWARE & DIY $ 2,891 $ 3,277 $ 3,798 $ 4,370 $ 4,984 $ 387 $ 907 $ 1,479 $ 2,094 31% 72% TOTAL inc HARDWARE $ 20,851 $ 23,945 $ 28,143 $ 32,819 $ 38,013 $ 3,094 $ 7,292 $ 11,968 $ 17,162 35% 82% RETAIL TYPE LOW GROWTH SUPERMARKETS $ 3,333 $ 3,689 $ 4,199 $ 4,755 $ 5,358 $ 356 $ 866 $ 1,422 $ 2,025 26% 61% OTHER FOOD $ 1,264 $ 1,398 $ 1,591 $ 1,802 $ 2,030 $ 135 $ 328 $ 538 $ % 61% CAFES & RESTAURANTS $ 1,442 $ 1,677 $ 1,975 $ 2,296 $ 2,644 $ 235 $ 534 $ 854 $ 1,202 37% 83% DEPARTMENT STORES $ 904 $ 998 $ 1,133 $ 1,280 $ 1,440 $ 94 $ 229 $ 376 $ % 59% APPAREL $ 959 $ 1,083 $ 1,251 $ 1,432 $ 1,630 $ 124 $ 292 $ 473 $ % 70% FAH $ 1,859 $ 2,053 $ 2,333 $ 2,638 $ 2,970 $ 193 $ 473 $ 779 $ 1,111 25% 60% OTHER RETAIL $ 2,738 $ 3,055 $ 3,497 $ 3,977 $ 4,499 $ 317 $ 759 $ 1,239 $ 1,761 28% 64% HOUSEHOLD SERVICES $ 107 $ 118 $ 134 $ 152 $ 171 $ 11 $ 27 $ 44 $ 63 25% 59% AUTOMOTIVE $ 5,355 $ 5,946 $ 6,771 $ 7,667 $ 8,627 $ 591 $ 1,415 $ 2,311 $ 3,272 26% 61% TOTAL $ 17,960 $ 20,016 $ 22,883 $ 25,998 $ 29,369 $ 2,055 $ 4,923 $ 8,038 $ 11,408 27% 64% HARDWARE & DIY $ 2,891 $ 3,212 $ 3,656 $ 4,140 $ 4,652 $ 321 $ 766 $ 1,250 $ 1,761 26% 61% TOTAL inc HARDWARE $ 20,851 $ 23,227 $ 26,539 $ 30,138 $ 34,021 $ 2,376 $ 5,688 $ 9,287 $ 13,170 27% 63% Source: Statistics NZ, 2008; RSDM,

52 All of these futures show substantial growth in the Auckland retail sector throughout the next two decades. Whether the growth is faster (High future) or slower (Low future) than the base outlook, there will be significant increases in demand, and corresponding requirements for additional retail floorspace Regional Retail Floorspace Growth to 2026 The growth in retail demand will drive substantial increases in retail floorspace in the Auckland Region. Under the medium growth future, total retail floorspace is expected to increase from 2,785,000 m 2 in 2007 to 4,262,000 m 2 in 2026, an increase of 1,477,000 m 2 (59%) (Table 3.12). The projected total growth to 2016 is 649,000 m 2 at an annual average rate of 72,000 m 2. If the hardware-diy sector is included, then total projected growth is 1,738,000 m 2, with 738,000 m 2 by 2016 an annual average rate of 82,000 m 2. Key features of the projections include: i. Floorspace growth is spread across all retail types, with similar growth rates (%) for each type; ii. The largest projected increases are in the automotive and hardware-diy sectors. Automotive, with 325,000 m 2, accounts for 19% of the total, while hardware-diy with 261,000 m 2 accounts for 15%. iii. The food and grocery sector, including supermarkets, accounts for 210,000 m 2 over the period (12%) with annual growth of around 11,000 m 2. iv. The comparison retail sector has projected growth of 701,000 m 2 or 40% of the total, an annual increase of some 37,000 m 2 region-wide. The total includes 111,000 m 2 of department store space, 137,000 m 2 of apparel, 204,000 m 2 in the FAH sector, and 249,000 m 2 in other retail over the period. v. The café-restaurant-takeaway sector has projected growth of 229,000 m 2, or 13% of the total. vi. If the automotive and hardware-diy sectors are excluded, then total growth from food and grocery, comparison and café-restaurant and service sectors would be 1,152,000 m 2 over the period. This amounts to annual growth of 56,000 m 2 to 2016, and around 61,000 m 2 to vii. Including the automotive and hardware-diy sectors, average annual growth would be 85,000 m 2 to 2016, and around 91,000 m 2 to

53 Table 3.12: Auckland Region Retail Floorspace by Storetype RETAIL TYPE MEDIUM GROWTH SUPERMARKETS 275, , , , ,000 26,000 62, , ,000 OTHER FOOD 131, , , , ,000 13,000 30,000 49,000 69,000 CAFES & RESTAURANTS 357, , , , ,000 45, , , ,000 DEPARTMENT STORES 232, , , , ,000 21,000 49,000 79, ,000 APPAREL 243, , , , ,000 26,000 60,000 97, ,000 FAH 390, , , , ,000 37,000 89, , ,000 OTHER RETAIL 475, , , , ,000 46, , , ,000 HOUSEHOLD SERVICES 23,000 25,000 28,000 31,000 35,000 2,000 5,000 8,000 12,000 AUTOMOTIVE 659, , , , ,000 61, , , ,000 TOTAL 2,785,000 3,062,000 3,434,000 3,835,000 4,262, , ,000 1,050,000 1,477,000 HARDWARE & DIY 547, , , , ,000 50, , , ,000 TOTAL inc HARDWARE 3,332,000 3,659,000 4,099,000 4,570,000 5,070, , ,000 1,238,000 1,738,000 TOTAL excl AUTO & HARDWARE 2,126,000 2,342,000 2,631,000 2,944,000 3,278, , , ,000 1,152,000 RETAIL TYPE HIGH GROWTH SUPERMARKETS 275, , , , ,000 32,000 74, , ,000 OTHER FOOD 131, , , , ,000 15,000 36,000 58,000 82,000 CAFES & RESTAURANTS 357, , , , ,000 48, , , ,000 DEPARTMENT STORES 232, , , , ,000 25,000 58,000 93, ,000 APPAREL 243, , , , ,000 30,000 68, , ,000 FAH 390, , , , ,000 46, , , ,000 OTHER RETAIL 475, , , , ,000 55, , , ,000 HOUSEHOLD SERVICES 23,000 26,000 29,000 33,000 37,000 3,000 6,000 10,000 14,000 AUTOMOTIVE 659, , , ,000 1,033,000 71, , , ,000 TOTAL 2,785,000 3,110,000 3,538,000 3,998,000 4,495, , ,000 1,213,000 1,710,000 HARDWARE & DIY 547, , , , ,000 56, , , ,000 TOTAL inc HARDWARE 3,332,000 3,713,000 4,215,000 4,753,000 5,331, , ,000 1,421,000 1,999,000 TOTAL excl AUTO & HARDWARE 2,126,000 2,380,000 2,713,000 3,072,000 3,462, , , ,000 1,336,000 RETAIL TYPE LOW GROWTH SUPERMARKETS 275, , , , ,000 21,000 51,000 82, ,000 OTHER FOOD 131, , , , ,000 10,000 25,000 40,000 56,000 CAFES & RESTAURANTS 357, , , , ,000 42,000 92, , ,000 DEPARTMENT STORES 232, , , , ,000 17,000 40,000 65,000 91,000 APPAREL 243, , , , ,000 23,000 52,000 83, ,000 FAH 390, , , , ,000 30,000 74, , ,000 OTHER RETAIL 475, , , , ,000 39,000 92, , ,000 HOUSEHOLD SERVICES 23,000 25,000 27,000 30,000 33,000 2,000 4,000 7,000 10,000 AUTOMOTIVE 659, , , , ,000 52, , , ,000 TOTAL 2,785,000 3,021,000 3,339,000 3,672,000 4,020, , , ,000 1,235,000 HARDWARE & DIY 547, , , , ,000 45, , , ,000 TOTAL inc HARDWARE 3,332,000 3,613,000 3,993,000 4,390,000 4,803, , ,000 1,058,000 1,471,000 TOTAL excl AUTO & HARDWARE 2,126,000 2,310,000 2,556,000 2,814,000 3,084, , , , ,000 44

54 High and Low Futures The High growth future would see stronger floorspace growth at a rate about 15% above the Medium future. This would see an additional 1,710,000 m 2 of floorspace by 2026, at an annual rate of 90,000 m 2 (or 105,000 m 2 including hardware-diy). That would mean Auckland Region s total floorspace would reach 3,538,000 m 2 by 2016 (4,215,000 m 2 with hardware-diy) and 4,496,000 m 2 by 2026 (5,331,000 m 2 including hardware-diy). The projected increase in floorspace would be 27% by 2016, and 61% by The Low growth future would see lesser increases, at a rate about 15% lower than the Medium future. This would see an additional 1,235,000 m 2 of floorspace by 2026, at an annual rate of 65,000 m 2 (or 77,000 m 2 including hardware-diy). That would mean the Auckland Region total floorspace would reach 3,339,000 m 2 by 2016 (3,993,000 m 2 with hardware-diy), and 4,020,000 m 2 by 2026 (4,803,000 m 2 including hardware-diy). The projected increase in floorspace would be 20% by 2016, and 44% by Growth in LFR Floorspace Large format retail is expected to account for a significant share of future floorspace growth, throughout the Region and across most retail types. Specific floorspace projections for LFR have been developed, based on the total floorspace growth figures, and estimated shares likely to be in large format outlets. Large Format Shares of Retail Floorspace The share of retail floorspace which is in large format outlets has been addressed in two ways. First, the Business Frame (Statistics NZ) meshblock level dataset has been used to identify the average outlet size (EC per GU and MEC per GU) for each retail type in each location. The floorspace for each outlet in each meshblock has been estimated by simply combining the EC and MEC information with the regional level estimates of floorspace per EC and per MEC. The results have been aggregated to produce estimates of current outlet size by storetype for each TA within the Region. The numbers of outlets in each floorspace size range, and the total floorspace, have been estimated to show shares in LFR and SFR outlets. This approach provides a good approximation of the floorspace structure by storetype, to show the current situation. It is an approximation because the meshblock level data is randomly rounded by Statistics NZ, and there is no certainty that the average floorspace per EC or MEC applies to all outlets some outlets may have more intensive employment levels (EC per m 2 ) and show up as large format when they are not, while others may have lower employment per m 2 and not show up as large format even though they exceed the threshold. Nevertheless, the approach offers some 45

55 strength in providing a snapshot of the current situation, especially because the LEED data from Statistics NZ provides good information on outlet (GU) size in employment terms. The second approach is also based on LEED and Business Frame data, together with national average EC and MEC per m 2 levels. Total floorspace for each storetype is estimated in each floor size range, by simply combining the total employment in each GU size group with the m 2 per EC and MEC estimates. This shows the shares of each storetype s floorspace in each size range (m 2 ) at a given point in time. Comparison of the positions over two points in time can be used to show the net changes in each floorspace size range, and therefore the shares of the net floorspace increase which is in large format rather than small format, over the period. For this study, the analysis was undertaken for 2001 and 2007, showing the net changes in floorspace structure at the national level for each storetype over the period, and the indicated % shares of floorspace growth which had been in each floorspace size range. Based on the national level analysis ( ), the shares of floorspace growth apparent as large format are as follows: i. Supermarket 100% ii. Other Food 25% iii. Department Store 95% iv. Apparel 30% v. FAH 75% vi. Other Retail 50% vii. Café-Restaurant 8% viii. Services 5% ix. Automotive 20% x. Hardware-DIY 95% These % shares have been applied to the projected floorspace growth for each retail type, to estimate the shares of growth likely to be large format. Overall, some 52-55% of the total growth is expected to be large format, while in the food and grocery and comparison retail sectors, shares of 63-66% are indicated. These are lower proportions than has been portrayed in some studies, where the shares are variously suggested as in excess of 70% and potentially over 80% of all new retail space. However, while growth in the higher profile supermarket, department store, appliance and furnishings/homewares retail is dominated by large format outlets, there are still substantial shares of growth in storetypes where large format is not dominant especially other food, café-restaurant, apparel and services. 46

56 Table 3.13: Auckland Region LFR Floorspace Growth by Retail Type RETAIL TYPE MEDIUM GROWTH SUPERMARKETS 271, , , , ,000 26,000 62, , ,000 OTHER FOOD 9,000 12,000 17,000 21,000 26,000 3,000 8,000 12,000 17,000 CAFES & RESTAURANTS 54,000 57,000 62,000 66,000 71,000 3,000 8,000 12,000 17,000 DEPARTMENT STORES 232, , , , ,000 20,000 46,000 75, ,000 APPAREL 26,000 34,000 44,000 55,000 67,000 8,000 18,000 29,000 41,000 FAH 192, , , , ,000 28,000 67, , ,000 OTHER RETAIL 91, , , , ,000 23,000 55,000 89, ,000 HOUSEHOLD SERVICES 3,000 3,000 3,000 3,000 4, ,000 AUTOMOTIVE 256, , , , ,000 12,000 29,000 47,000 65,000 TOTAL 1,134,000 1,257,000 1,427,000 1,607,000 1,799, , , , ,000 HARDWARE & DIY 382, , , , ,000 48, , , ,000 TOTAL inc HARDWARE 1,516,000 1,687,000 1,921,000 2,168,000 2,429, , , , ,000 TOTAL excl AUTO & HARDWARE 878, ,000 1,142,000 1,304,000 1,478, , , , ,000 RETAIL TYPE HIGH GROWTH SUPERMARKETS 271, , , , ,000 32,000 74, , ,000 OTHER FOOD 9,000 13,000 18,000 24,000 29,000 4,000 9,000 15,000 20,000 CAFES & RESTAURANTS 54,000 58,000 62,000 67,000 73,000 4,000 8,000 13,000 19,000 DEPARTMENT STORES 232, , , , ,000 24,000 55,000 89, ,000 APPAREL 26,000 35,000 47,000 59,000 73,000 9,000 21,000 33,000 47,000 FAH 192, , , , ,000 35,000 80, , ,000 OTHER RETAIL 91, , , , ,000 28,000 64, , ,000 HOUSEHOLD SERVICES 3,000 3,000 3,000 4,000 4, ,000 1,000 AUTOMOTIVE 256, , , , ,000 14,000 33,000 53,000 75,000 TOTAL 1,134,000 1,284,000 1,478,000 1,690,000 1,916, , , , ,000 HARDWARE & DIY 382, , , , ,000 54, , , ,000 TOTAL inc HARDWARE 1,516,000 1,720,000 1,984,000 2,270,000 2,573, , , ,000 1,057,000 TOTAL excl AUTO & HARDWARE 878,000 1,014,000 1,189,000 1,381,000 1,585, , , , ,000 RETAIL TYPE LOW GROWTH SUPERMARKETS 271, , , , ,000 21,000 51,000 82, ,000 OTHER FOOD 9,000 12,000 15,000 19,000 23,000 3,000 6,000 10,000 14,000 CAFES & RESTAURANTS 54,000 57,000 61,000 65,000 69,000 3,000 7,000 11,000 15,000 DEPARTMENT STORES 232, , , , ,000 16,000 38,000 62,000 86,000 APPAREL 26,000 33,000 42,000 51,000 61,000 7,000 16,000 25,000 35,000 FAH 192, , , , ,000 23,000 55,000 89, ,000 OTHER RETAIL 91, , , , ,000 20,000 46,000 74, ,000 HOUSEHOLD SERVICES 3,000 3,000 3,000 3,000 4, ,000 AUTOMOTIVE 256, , , , ,000 10,000 25,000 40,000 55,000 TOTAL 1,134,000 1,237,000 1,378,000 1,527,000 1,683, , , , ,000 HARDWARE & DIY 382, , , , ,000 43, , , ,000 TOTAL inc HARDWARE 1,516,000 1,662,000 1,861,000 2,071,000 2,289, , , , ,000 TOTAL excl AUTO & HARDWARE 878, ,000 1,097,000 1,231,000 1,372,000 93, , , ,000 47

57 LFR Projections by Retail Type The growth in retail demand means there will be substantial growth in LFR floorspace in the Auckland Region over the next two decades, and beyond. Under the Medium growth future, total LFR floorspace is expected to increase from 1,134,000 m 2 in 2007 to 1,799,000 m 2 in 2026, an increase of 665,000 m 2 at an annual average rate of 35,000 m 2 (Table 3.13). The projected total growth to 2016 is 293,000 m 2 at an annual average rate of 32,000 m 2. If the hardware-diy sector is included, then total projected growth is 913,000 m 2 405,000 m 2 by 2016 an annual average rate of 48,000 m 2. by 2026, with Key features of the LFR projections include: i. Large format floorspace growth is relatively concentrated, with supermarkets, department stores, FAH and hardware-diy accounting for the major shares. However, other food, apparel, café-restaurant and automotive are expected to contribute relatively small shares; ii. The largest projected increase is in the hardware-diy sector, with 248,000 m 2 or nearly 25% of the total. iii. Substantial growth is expected in supermarkets (141,000 m 2 ), department (105,000 m 2 ), FAH (153,000 m 2 ), and other comparison retail (125,000 m 2 ). Together, these storetypes are expected to generate some 524,000 m 2 in LFR floorspace, at a rate of 27-28,000 m 2 per year. iv. The combined other food, apparel, café-restaurant and service sectors are expected to generate floorspace growth of around 4,000 m 2 per year, or 76,000 m 2 over the period. v. The automotive sector has mixed demand. On one hand, the trend toward substantial vehicle show rooms by some dealers has seen their premises characterised by large format space. On the other hand, this sector is still characterised by a large number of smaller scale vehicle dealers, especially those in used vehicles, with limited floorspace which is mostly office rather than show room. Similarly, the automotive service sector (tyres, fuel, repair and electrical) are typically smaller or medium scale, rather than large format retail. High and Low Futures The High growth future would see LFR floorspace growth at a rate about 15% above the Medium future, with an additional 782,000 m 2 of floorspace by 2026, at an annual rate of 41,000 m 2. Including hardware-diy, the projected growth is 1,057,000 m 2 by 2026, an annual rate of 56,000 m 2. That would mean Auckland Region s total LFR floorspace reaching 1,916,000 m 2 by 2026 (2,573,000 m 2 with hardware-diy). The Low growth future would see increases about 15% lower than the Medium future, with an additional 549,000 m 2 of LFR floorspace by 2026 (773,000 m 2 with hardware-diy). The implied annual rate is 29,000 m 2, or 41,000 m 2 including hardware-diy. The Auckland Region s total LFR floorspace would be 1,683,000 m 2, or 2,289,000 m 2 including hardware-diy. 48

58 3.3.6 Retail Demand Growth by TA The projected retail demand growth by territorial authority is shown in Table 3.14, for all retail types and hardware-diy. As with the regional estimates above, these demand projections include only that arising from within each TA area. Substantial growth is projected in all of the TA areas, ranging from an increase of 83% for Manukau City to only 63% for Papakura District. Key features of the projected demand growth include: i. The largest demand growth is expected in the Auckland City market. Total demand of $7.6Bn is projected to increase by $5.4Bn (71%) to reach $13.1Bn by Auckland City s demand growth equates to an annual average increase of $257m to 2016, and $286m until 2026; ii. Very substantial growth is also projected in Manukau City. The region s second largest market currently generates retail demand of $4.5Bn, and this is expected to grow to $6.0Bn by 2016 (35%) and to $8.6Bn by 2026 (83%). Manukau s demand growth represents an annual average increase of $171m to 2016, and $194m per year until 2026; iii. Nearly $2.1Bn of demand growth is projected for North Shore City, with close to $0.9Bn by While the growth rate for North Shore is somewhat slower than the regional average (64% by 2026), it is already a large market ($3.25Bn). This would see average annual growth of $97m to 2016, and $109m per year until 2026; iv. A slightly lesser scale of growth is projected for Waitakere City, with an increase of $1.8Bn by 2026, and including nearly $0.8Bn by Waitakere s growth would see the market increase from $2.5Bn currently to $3.3Bn by 2016 (up 31%) and $4.3Bn by 2026 (71%). The projected average annual growth is $87m to 2016, and $95m until 2026; v. The growth projected for Rodney District would see an increase of $1.1Bn by 2026, from the current $1.4Bn to $2.5Bn (77%). This includes a 33% increase by 2016, to $1.9Bn. The demand increase in Rodney reflects mainly its stronger than average population growth rate. This would see average annual growth of $52m to 2016, and $56m per year until 2026; vi. The projected growth for Papakura District is slower than the regional average (63% by 2026), and relatively small. The Papakura market would grow from the current $0.66Bn to $0.85Bn by 2016 (up by 27%) and $1.08Bn by 2026 (63%). Nevertheless, Papakura s retail demand would grow by some $21m to 2016, and $22m per year until 2026; vii. The growth projected for Franklin District would see an increase of nearly $0.7Bn by 2026 (up 76%), from the current $0.9Bn to $1.6Bn. This includes a 33% increase by 2016, to $1.2Bn. The growth would see an annual average increase of $33m to 2016, and $36m to

59 Table 3.14: Auckland Region Retail Demand ($m) by Territorial Authority TA MEDIUM GROWTH RODNEY $ 1,393 $ 1,590 $ 1,859 $ 2,151 $ 2,466 $ 197 $ 466 $ 758 $ 1,073 33% 77% NORTH SHORE $ 3,252 $ 3,611 $ 4,128 $ 4,699 $ 5,322 $ 359 $ 876 $ 1,447 $ 2,070 27% 64% WAITAKERE $ 2,546 $ 2,880 $ 3,330 $ 3,816 $ 4,343 $ 334 $ 784 $ 1,270 $ 1,797 31% 71% AUCKLAND $ 7,633 $ 8,611 $ 9,949 $ 11,438 $ 13,062 $ 977 $ 2,316 $ 3,805 $ 5,429 30% 71% MANUKAU $ 4,457 $ 5,093 $ 5,996 $ 7,012 $ 8,146 $ 635 $ 1,538 $ 2,555 $ 3,688 35% 83% PAPAKURA $ 664 $ 740 $ 849 $ 962 $ 1,079 $ 76 $ 185 $ 299 $ % 63% FRANKLIN $ 906 $ 1,029 $ 1,201 $ 1,388 $ 1,593 $ 123 $ 295 $ 482 $ % 76% AUCKLAND REGION $ 20,851 $ 23,553 $ 27,312 $ 31,466 $ 36,011 $ 2,702 $ 6,461 $ 10,615 $ 15,160 31% 73% TA HIGH GROWTH RODNEY $ 1,393 $ 1,636 $ 1,956 $ 2,306 $ 2,693 $ 243 $ 563 $ 914 $ 1,300 40% 93% NORTH SHORE $ 3,252 $ 3,678 $ 4,270 $ 4,927 $ 5,656 $ 426 $ 1,018 $ 1,675 $ 2,404 31% 74% WAITAKERE $ 2,546 $ 2,930 $ 3,436 $ 3,986 $ 4,593 $ 384 $ 890 $ 1,440 $ 2,047 35% 80% AUCKLAND $ 7,633 $ 8,724 $ 10,190 $ 11,832 $ 13,649 $ 1,091 $ 2,557 $ 4,199 $ 6,016 33% 79% MANUKAU $ 4,457 $ 5,171 $ 6,161 $ 7,285 $ 8,553 $ 713 $ 1,704 $ 2,828 $ 4,095 38% 92% PAPAKURA $ 664 $ 755 $ 881 $ 1,015 $ 1,156 $ 91 $ 217 $ 351 $ % 74% FRANKLIN $ 906 $ 1,051 $ 1,249 $ 1,467 $ 1,712 $ 146 $ 344 $ 562 $ % 89% AUCKLAND REGION $ 20,851 $ 23,945 $ 28,143 $ 32,819 $ 38,013 $ 3,094 $ 7,292 $ 11,968 $ 17,162 35% 82% TA LOW GROWTH RODNEY $ 1,393 $ 1,551 $ 1,768 $ 2,001 $ 2,248 $ 158 $ 376 $ 609 $ % 61% NORTH SHORE $ 3,252 $ 3,554 $ 3,998 $ 4,480 $ 4,999 $ 302 $ 746 $ 1,228 $ 1,747 23% 54% WAITAKERE $ 2,546 $ 2,839 $ 3,235 $ 3,653 $ 4,101 $ 293 $ 689 $ 1,107 $ 1,555 27% 61% AUCKLAND $ 7,633 $ 8,517 $ 9,722 $ 11,037 $ 12,450 $ 884 $ 2,089 $ 3,404 $ 4,816 27% 63% MANUKAU $ 4,457 $ 5,029 $ 5,844 $ 6,748 $ 7,744 $ 572 $ 1,386 $ 2,291 $ 3,286 31% 74% PAPAKURA $ 664 $ 728 $ 819 $ 911 $ 1,005 $ 64 $ 155 $ 247 $ % 51% FRANKLIN $ 906 $ 1,009 $ 1,154 $ 1,308 $ 1,475 $ 103 $ 248 $ 403 $ % 63% AUCKLAND REGION $ 20,851 $ 23,227 $ 26,539 $ 30,138 $ 34,021 $ 2,376 $ 5,688 $ 9,287 $ 13,170 27% 63% Source: Statistics NZ, 2008; RSDM,

60 3.3.7 Floorspace Growth by Territorial Authority These are substantial increases in floorspace, with significant growth throughout the period for all retail types. Similarly strong growth is projected for each territorial authority area within the Region (Table 3.15). It is important to understand that the projections are based on the demand arising in each TA area, and the floorspace supply would not necessarily be met from within each TA. The existing demand and supply differences suggest that flows of retail spend will persist within the Region in the long term, albeit with increasing self-sufficiency likely as markets grow. Key features include: i. The largest floorspace growth is expected in Auckland City. Total projected growth is 274,000 m 2 by 2016 and 620,000 m 2 by This includes automotive and hardware-diy, which account for around one-third of the total. Growth excluding these types is projected at 180,000 m 2 by 2016 and 410,000 m 2 by ii. Substantial growth is also projected in Manukau City, with an additional 186,000 m 2 by 2016 and 429,000 m 2 by 2026 for all types. Growth excluding automotive and hardware-diy is projected at 124,000 m 2 by 2016 and 270,000 m 2 by 2026; iii. Projected growth in North Shore City would see an additional 101,000 m 2 by 2016 and 230,000 m 2 by 2026 for all types. Growth excluding automotive and hardware-diy is projected at 67,000 m 2 by 2016 and 160,000 m 2 by 2026; iv. A similar scale of growth is projected for Waitakere City, with a projected increase of 93,000 m 2 by 2016 and 205,000 m 2 by 2026 for all types. Growth excluding automotive and hardware-diy is projected at 62,000 m 2 by 2016 and 137,000 m 2 by 2026; v. A lesser scale of growth projected for Rodney District would see an increase of 56,000 m 2 by 2016 and 125,000 m 2 by 2026 for all types. Growth excluding automotive and hardware-diy is projected at 38,000 m 2 by 2016 and 84,000 m 2 by 2026; vi. Similarly, a smaller share of regional growth is indicated for Papakura District with 22,000 m 2 by 2016 and 47,000 m 2 by 2026 for all types. Excluding automotive and hardware-diy this would be 15,000 m 2 by 2016 and 32,000 m 2 by 2026; vii. A slightly larger scale of growth is projected for Franklin District, with a projected increase of 36,000 m 2 by 2016 and 79,000 m 2 by 2026 for all types. Excluding automotive and hardware- DIY this would be 24,000 m 2 by 2016 and 53,000 m 2 by As with the regional projections, the High and Low futures would see floorspace growth within a range of some 15% above (High growth) and 15% below (Low growth) these Medium figures. 51

61 Table 3.15: Auckland Region Retail Floorspace Growth by Territorial Authority RETAIL TYPE MEDIUM GROWTH RODNEY 151, , , , ,000 24,000 56,000 90, ,000 NORTH SHORE 585, , , , ,000 42, , , ,000 WAITAKERE 349, , , , ,000 41,000 93, , ,000 AUCKLAND 1,352,000 1,470,000 1,626,000 1,795,000 1,972, , , , ,000 MANUKAU 694, , , ,000 1,123,000 78, , , ,000 PAPAKURA 99, , , , ,000 9,000 22,000 34,000 47,000 FRANKLIN 102, , , , ,000 15,000 36,000 57,000 79,000 AUCKLAND REGION 3,332,000 3,659,000 4,100,000 4,571,000 5,067, , ,000 1,239,000 1,735,000 RETAIL TYPE HIGH GROWTH RODNEY 151, , , , ,000 31,000 70, , ,000 NORTH SHORE 585, , , , ,000 51, , , ,000 WAITAKERE 349, , , , ,000 48, , , ,000 AUCKLAND 1,352,000 1,486,000 1,660,000 1,848,000 2,050, , , , ,000 MANUKAU 694, , ,000 1,034,000 1,177,000 89, , , ,000 PAPAKURA 99, , , , ,000 11,000 26,000 41,000 57,000 FRANKLIN 102, , , , ,000 18,000 42,000 67,000 95,000 AUCKLAND REGION 3,332,000 3,714,000 4,215,000 4,753,000 5,333, , ,000 1,421,000 2,001,000 RETAIL TYPE LOW GROWTH RODNEY 151, , , , ,000 19,000 44,000 70,000 96,000 NORTH SHORE 585, , , , ,000 34,000 83, , ,000 WAITAKERE 349, , , , ,000 35,000 80, , ,000 AUCKLAND 1,352,000 1,457,000 1,595,000 1,740,000 1,890, , , , ,000 MANUKAU 694, , , ,000 1,070,000 69, , , ,000 PAPAKURA 99, , , , ,000 7,000 18,000 27,000 37,000 FRANKLIN 102, , , , ,000 12,000 29,000 46,000 64,000 AUCKLAND REGION 3,332,000 3,613,000 3,993,000 4,390,000 4,804, , ,000 1,058,000 1,472,000 52

62 Components of Floorspace Growth It is similarly important to understand that the floorspace projections are sensitive to the underlying assumptions about sales productivity and efficiency gains. On one hand, Auckland s generally higher sales productivity levels mean that the Region has a slightly lower supply of floorspace per $m of demand generated. If the productivity levels are lower than estimated, then the current level of supply and the future growth would be greater than projected. On the other hand, the projections assume that future gains in sales productivity will be relatively modest, at 0.5% per year over the period. This offsets about half the projected growth in spend per household for the floorspace calculations, or around one-fifth of the total demand growth. In other words, if there were no allowance made for floorspace productivity gains, then the floorspace projections would be higher by around one quarter or another 425,000 m 2 over the 2026 period (Medium growth). Conversely, if the retail sector were to achieve a more rapid rate of productivity increase say, 1% per year then the future floorspace growth would be around 25% less (425,000 m 2 over the period). However, even in a situation of no growth in spend per household and higher floorspace productivity gains, there would still be substantial growth in retail floorspace, driven by the population growth, tourism growth and associated increases in business activity throughout the next two decades and beyond LFR Projections by Territorial Authority Area The projected growth in LFR would be substantial in all of the region s territorial authorities. Table 3.16 shows the projections for all retail types, while Table 3.17 shows the LFR floorspace excluding automotive and hardware-diy. Key features include: i. As previously, the greatest LFR growth is expected in Auckland City, with a projected total of growth is 138,000 m 2 by 2016 and 312,000 m 2 by 2026 (including automotive and hardware- DIY). Growth excluding these types is projected at 88,000 m 2 by 2016 and 199,000 m 2 by ii. In Manukau City, an additional 99,000 m 2 of LFR is expected by 2016 and 229,000 m 2 by 2026 for all types. Excluding automotive and hardware-diy, growth is projected at 67,000 m 2 by 2016 and 156,000 m 2 by 2026; iii. In North Shore City projected demand growth would see another 54,000 m 2 of LFR by 2016 and 123,000 m 2 by 2026 for all types. With automotive and hardware-diy excluded, the LFR growth is 36,000 m 2 by 2016 and 82,000 m 2 by 2026; 53

63 iv. A similar scale of LFR growth is projected for Waitakere City, with 51,000 m 2 by 2016 and 111,000 m 2 by 2026 for all types. Without automotive and hardware-diy, LFR growth of 34,000 m 2 is expected by 2016 and 75,000 m 2 by 2026; v. Rodney District would see an increase of 31,000 m 2 by 2016 and 69,000 m 2 by 2026 for all types. Excluding automotive and hardware-diy, the LFR increases would be 19,000 m 2 by 2016 and 43,000 m 2 by 2026; vi. A smaller share of growth is expected for Papakura District with 12,000 m 2 by 2016 and 26,000 m 2 by 2026 for all types. Excluding automotive and hardware-diy this would be 7,000 m 2 by 2016 and 16,000 m 2 by 2026; vii. The LFR growth indicated for Franklin District is 19,000 m 2 by 2016 and 43,000 m 2 by 2026 for all types. Excluding automotive and hardware-diy this would be 10,000 m 2 by 2016 and 22,000 m 2 by The High and Low futures would see LFR growth in the range of 15% above the Medium (High growth) and 15% below (Low growth). LFR and Centres The detail on LFR excluding automotive and hardware-diy is important, because it shows the situation for those components of retail activity which mainly locate in centres. Automotive and hardware-diy outlets commonly locate on the fringes of centres, along main arterials, and (for hardware especially) in general business areas. However, supermarkets, other food stores, and comparison retail outlets are mainly (though not exclusively) located in and adjacent to commercial centres, and are mainstay activities in many centres. Therefore, the scale of growth in these storetypes is a clear indication of the additional capacity required in either existing or new commercial centres, to accommodate the retail activity. The situation is not straightforward, especially because the large footprints and land requirements of large format outlets has meant considerable pressure to enable these larger stores to locate in out of centre locations. More generally, the larger format stores often seek fringe of centre location, rather than premises in the heart of centres where small format retail and service activity is concentrated. Floorspace per Household Ratios The combination of demand growth, increases in real spend, and improving floorspace sales productivity would see a long term increase in floorspace per household in the Region. In total, floorspace would increase by 10% from 6.66 m 2 per household to 7.32 m 2 by For the food and grocery, comparison retail and café-restaurant sectors, the floorspace ratios would increase by 11% from 4.33 m 2 per household to 4.79 m 2 by

64 LFR floorspace ratios would similarly increase over the period, by 14% from 3.17 m 2 per household to 3.61 m 2 by For the food and grocery, comparison retail and café-restaurant sectors, the LFR floorspace ratios would increase by 20% from 1.84 m 2 per household to 2.20 m 2 by

65 Table 3.16: Auckland Region LFR Floorspace Growth by Territorial Authority RETAIL TYPE MEDIUM GROWTH RODNEY 51,000 64,000 82, , ,000 13,000 31,000 50,000 69,000 NORTH SHORE 275, , , , ,000 22,000 54,000 88, ,000 WAITAKERE 158, , , , ,000 22,000 51,000 80, ,000 AUCKLAND 591, , , , ,000 59, , , ,000 MANUKAU 346, , , , ,000 41,000 99, , ,000 PAPAKURA 49,000 54,000 61,000 68,000 75,000 5,000 12,000 19,000 26,000 FRANKLIN 46,000 54,000 65,000 77,000 89,000 8,000 19,000 31,000 43,000 AUCKLAND REGION 1,516,000 1,686,000 1,920,000 2,168,000 2,429, , , , ,000 RETAIL TYPE HIGH GROWTH RODNEY 51,000 68,000 90, , ,000 17,000 39,000 61,000 85,000 NORTH SHORE 275, , , , ,000 27,000 65, , ,000 WAITAKERE 158, , , , ,000 26,000 59,000 93, ,000 AUCKLAND 591, , , , ,000 68, , , ,000 MANUKAU 346, , , , ,000 48, , , ,000 PAPAKURA 49,000 55,000 64,000 72,000 81,000 6,000 15,000 23,000 32,000 FRANKLIN 46,000 56,000 69,000 82,000 97,000 10,000 23,000 36,000 51,000 AUCKLAND REGION 1,516,000 1,718,000 1,986,000 2,268,000 2,572, , , ,000 1,056,000 RETAIL TYPE LOW GROWTH RODNEY 51,000 61,000 75,000 90, ,000 10,000 24,000 39,000 53,000 NORTH SHORE 275, , , , ,000 18,000 44,000 71, ,000 WAITAKERE 158, , , , ,000 19,000 43,000 68,000 94,000 AUCKLAND 591, , , , ,000 52, , , ,000 MANUKAU 346, , , , ,000 36,000 87, , ,000 PAPAKURA 49,000 53,000 59,000 64,000 70,000 4,000 10,000 15,000 21,000 FRANKLIN 46,000 53,000 62,000 71,000 80,000 7,000 16,000 25,000 34,000 AUCKLAND REGION 1,516,000 1,662,000 1,862,000 2,071,000 2,290, , , , ,000 Source: Statistics NZ, 2008; RSDM,

66 Table 3.17: Auckland Region LFR Floorspace by TA, Excl Automotive & Hardware-DIY RETAIL TYPE MEDIUM GROWTH RODNEY 31,000 39,000 50,000 62,000 74,000 8,000 19,000 31,000 43,000 NORTH SHORE 151, , , , ,000 15,000 36,000 58,000 82,000 WAITAKERE 111, , , , ,000 15,000 34,000 54,000 75,000 AUCKLAND 320, , , , ,000 38,000 88, , ,000 MANUKAU 210, , , , ,000 28,000 67, , ,000 PAPAKURA 28,000 31,000 35,000 40,000 44,000 3,000 7,000 12,000 16,000 FRANKLIN 27,000 33,000 40,000 47,000 55,000 6,000 13,000 20,000 28,000 AUCKLAND REGION 878, ,000 1,142,000 1,305,000 1,477, , , , ,000 RETAIL TYPE HIGH GROWTH RODNEY 31,000 42,000 56,000 70,000 86,000 11,000 25,000 39,000 55,000 NORTH SHORE 151, , , , ,000 18,000 44,000 71, ,000 WAITAKERE 111, , , , ,000 18,000 40,000 63,000 88,000 AUCKLAND 320, , , , ,000 44, , , ,000 MANUKAU 210, , , , ,000 33,000 77, , ,000 PAPAKURA 28,000 32,000 37,000 43,000 48,000 4,000 9,000 15,000 20,000 FRANKLIN 27,000 34,000 42,000 51,000 62,000 7,000 15,000 24,000 35,000 AUCKLAND REGION 878,000 1,013,000 1,190,000 1,379,000 1,585, , , , ,000 RETAIL TYPE LOW GROWTH RODNEY 31,000 37,000 45,000 54,000 63,000 6,000 14,000 23,000 32,000 NORTH SHORE 151, , , , ,000 11,000 28,000 46,000 64,000 WAITAKERE 111, , , , ,000 12,000 28,000 45,000 62,000 AUCKLAND 320, , , , ,000 32,000 75, , ,000 MANUKAU 210, , , , ,000 24,000 58,000 95, ,000 PAPAKURA 28,000 30,000 34,000 37,000 40,000 2,000 6,000 9,000 12,000 FRANKLIN 27,000 31,000 37,000 43,000 49,000 4,000 10,000 16,000 22,000 AUCKLAND REGION 878, ,000 1,097,000 1,233,000 1,372,000 91, , , ,000 Source: Statistics NZ, 2008; RSDM,

67 4 Auckland City Retail Activity 4.1 Current Situation In 2006, the retail trade sector was the third largest industry in employment terms (31,970 MEC) (Table 4.1). The retail trade s gross output for Auckland City was $1,924m and value added was $1,267m, making it the sixth most important industry sector in Auckland City s economy (Table 4.2). Industry Table 4.1: Auckland City Employment by Top 10 Sectors, 2006 Employment Count Employment 2006 % Share of Auckland City Total Modified Employment Count % Share of Auckland City Total Business services 62, % 71, % Wholesale trade 30, % 32, % Retail trade 28, % 31, % Health & community services 24, % 25, % Construction 13, % 17, % Cultural & recreational services 10, % 14, % Finance 10, % 11, % Communication services 8, % 8, % Air transport, services to transport & storage 6, % 6, % Electricity generation & supply % % Source: EFM, Industry Table 4.2: Auckland City Output and Value Added by Top 10 Sectors, 2006 Gross Output 2006 Value Added 2006 $2004 million % Share of Auckland City Total $2004 million % Share of Auckland City Total Business services 7, % 4, % Wholesale trade 6, % 2, % Finance 2, % 2, % Construction 2, % % Cultural & recreational services 2, % 1, % Retail trade 1, % 1, % Communication services 1, % 1, % Air transport, services to transport & storage 1, % % Health & community services 1, % 1, % Electricity generation & supply 1, % % Source: EFM, Retail Sales In 2007, the retail sector had estimated sales of $8,014m, with a further $1,119m in the hardware-diy sector (Table 4.3). It accounted for some 40% of total regional sales, including 50% in the caférestaurant sector, and 51% in apparel. Only in the supermarket and department store sectors are its sales in line with Auckland City s share of the region s population. In all other storetypes, Auckland City 58

68 attracts more than its share of sales, reflecting the presence of downtown Auckland as the regional CBD, and the focus of tourism and business activity within the City. Table 4.3: Auckland City Retail Sales 2007 RETAIL TYPE Auckland City Rest of Region Auckland Auckland City Region Share % SUPERMARKETS $ 1,099 $ 2,500 $ 3,598 31% OTHER FOOD $ 544 $ 785 $ 1,329 41% CAFES & RESTAURANTS $ 918 $ 908 $ 1,826 50% DEPARTMENT STORES $ 316 $ 718 $ 1,035 31% APPAREL $ 559 $ 534 $ 1,092 51% FAH $ 778 $ 1,172 $ 1,950 40% OTHER RETAIL $ 1,309 $ 1,762 $ 3,071 43% HOUSEHOLD SERVICES $ 46 $ 64 $ % AUTOMOTIVE $ 2,446 $ 3,303 $ 5,749 43% TOTAL $ 8,014 $ 11,745 $ 19,759 41% HARDWARE & DIY $ 1,119 $ 1,981 $ 3,101 36% TOTAL inc HARDWARE $ 9,133 $ 13,727 $ 22,860 40% Source: Statistics NZ, 2008; RSDM, Retail Employment In 2007, there were approximately 46,000 persons employed (MEC) in the retail sector, with a further 2,790 in the hardware-diy sector (Table 4.4). The largest sector was cafes and restaurants (15,500 MECs), followed by other retailing (7,400 MECs), apparel (4,500 MECs) and supermarkets (3,900 MECs). Some 75% of retail employment is located in Auckland City s centres, with 12,000 MECs in Auckland s CBD. Approximately 16% of retail employment is located in the business areas, with a further 9% dispersed throughout the special areas and non-economic areas. Spatial Economy Structure Supermarkets Other Food Table 4.4: Auckland City Retail Employment (MEC), 2007 Cafes & Restaurants Department Stores Apparel FAH Other Household Services Automotive CBD Total , , , ,175 Sub Regional Total , , ,595 Large Suburban Total ,090 Suburban Total 1, , ,060 Local Total , ,560 Island Local Total Minor Total Destinational Total ,005 Arterial Strip Total , ,730 Centre Total 4,020 2,340 11,770 1,445 4,160 2,020 5, ,680 34,465 Heavy Industry ,260 Production and Distribution ,765 3,120 Office Park ,220 Business Park ,405 Special Activity Area Business Area Total , ,275 7,250 Env Scientific Research Sports Facilities Education Health Special Area Total ,020 Non Economic Area Total , ,300 Auckland City Total 4,100 3,070 15,460 1,515 4,555 2,975 7, ,450 46,035 Total 59

69 4.1.3 Retail Floorspace Based on the recorded employment levels and sales levels, there was an estimated 1,151,000m² in Auckland City (June 2007) (Table 4.5). In addition, there is an estimated 201,000 m² of floorspace in the hardware-diy sector. Excluding the automotive sector, the other retailing sector had the greatest proportion (18%) of total floorspace, followed by cafes and restaurants (16%), furniture, appliances and hardware (14%), and apparel (11%). SPATIAL ECONOMY Super markets Table 4.5: Auckland City Retail Floorspace (m²), 2007 Other Food Cafes & Departmen Restaurants t Stores Apparel FAH Other Household Services Auto motive CBD Total 10,000 13,500 66,100 20,500 35,200 28,900 71, , ,000 Sub Regional Total 8,000 2,500 12,300 23,300 33,400 27,500 23, , ,000 Large Suburban Total 11,900 3,400 9,400 15,000 26,500 15,700 16, , ,000 Suburban Total 39,300 10,600 17,400 3,100 8,700 10,700 20, , ,000 Local Total 4,000 6,300 12,400-5,300 4,700 11, ,200 51,000 Island Local Total 1,900 1,000 1, ,400 2, ,000 Minor Total 300 2,400 3,400-1,400 5,800 5, ,800 22,000 Destinational Total 7, ,600 6,100 1,700 10,200 2,800-1,300 31,000 Arterial Strip Total , ,000 4, ,800 37,000 Centre Total 82,500 40, ,900 68, , , ,200 2, , ,000 Heavy Industry ,100 2,900 1,700 21,800 40,000 Production and Distribution 600 2,100 3,700 3,300 2,600 19,200 11, , ,000 Office Park , ,700 5,400 1,100 12,800 34,000 Business Park 100 1,400 6, ,200 4, ,100 43,000 Special Activity Area - - 2, ,000 Business Area Total 1,500 4,700 17,800 3,300 5,200 44,200 24,700 4, , ,000 Env Scientific Research Sports Facilities - - 6, ,000 Education , ,000 Health , ,000 Special Area Total , ,100 14,000 Non Economic Area Total - 8,100 14,900-5,200 6,900 21,200 1,800 18,300 76,000 Auckland City Total 84,000 53, ,000 71, , , ,000 9, ,700 1,151,000 Total Some 71% of retail floorspace is located in Auckland City s centres. The CBD had the largest share of floorspace with an estimated 261,000m², followed by Sub-regional centres (177,000m²), Suburban centres (136,000m²) and Large Suburban centres (106,000m²). Approximately 20% of total retail floorspace is located in Auckland City s business areas (232,000m²). Approximately half the retail floorspace in business areas is located in production and distribution business areas. The automotive sector accounts for approximately 60% of retail floorspace in production and distribution business areas, however there are also significant levels of retail floorspace for the furniture, appliances and hardware (19,200m²) and other retailing (11,400m²) sectors in comparison to other business area types. Approximately 8% of Auckland City s total retail floorspace was located in special areas or noneconomic areas. Three retail sectors accounted for the majority of this activity; automotive (19,370m²), cafes and restaurants (25,200m²) and other retailing (22,000m²) Large Format Retail Floorspace Approximately 39% of Auckland City s total retail floorspace is large format (455,000m²) (Table 4.6). The retail types which are characteristically large format, account for a substantial share (80%) of the city total, with automotive (129,500m²), furniture, appliances and hardware (77,700m²), supermarkets (76,700m²) and department stores (70,800m²). 60

70 Table 4.6: Auckland City Large and Small Format Retail Floorspace (m 2 ), 2007 RETAIL TYPE LFR Share % SFR Share % TOTAL Share % LFR Share % SUPERMARKETS 82,000 14% 2,000 0% 84,000 6% 98% OTHER FOOD 3,000 1% 50,000 7% 53,000 4% 6% CAFES & RESTAURANTS 34,000 6% 146,000 19% 180,000 13% 19% DEPARTMENT STORES 71,000 12% - 0% 71,000 5% 100% APPAREL 9,000 2% 114,000 15% 123,000 9% 7% FAH 78,000 13% 80,000 11% 158,000 12% 49% OTHER RETAIL 41,000 7% 164,000 22% 205,000 15% 20% HOUSEHOLD SERVICES 2,000 0% 7,000 1% 9,000 1% 22% AUTOMOTIVE 130,000 22% 138,000 18% 268,000 20% 49% TOTAL 450,000 76% 701,000 92% 1,151,000 85% 39% HARDWARE & DIY 141,000 24% 60,000 8% 201,000 15% 70% TOTAL inc DIY 591, % 761, % 1,352, % 44% Table 4.7 shows the estimated distribution of LFR floorspace across Auckland City s Spatial Economy. Approximately 70% of LFR is located in the centres, with a further 24% in business areas. Only 5% of LFR is located outside the business areas and centres, and the majority of this floorspace is in the cafe and restaurant sector (8,480m²), automotive retailing (4,680 m²), and other retailing (3,800m²). SPATIAL ECONOMY Table 4.7: Auckland City LFR Floorspace (m 2 ) by Spatial Economy, 2007 Super markets Other Food Cafes & Departmen Restaurants t Stores Apparel FAH Other Household Services Auto motive CBD Total 9, ,500 20,500 1,700 15,000 15,600-4,300 74,000 Sub Regional Total 8, ,300-11,500 5,700-40,400 90,000 Large Suburban Total 11, ,000-8, ,800 39,000 Suburban Total 39, ,900 3,100 3,800 3,200 1,300-8,800 63,000 Local Total 4,000 1, , ,000 Island Local Total 1, ,000 Minor Total ,000 Destinational Total 7, ,100-9,100 2, ,000 Arterial Strip Total , ,000-8,400 24,000 Centre Total 81,500 3,400 23,000 68,000 6,300 49,800 29,300-65, ,000 Heavy Industry , ,100 7,700 18,000 Production and Distribution ,300 1,700 10,000 5,100-30,800 52,000 Office Park ,600 1,100-3,900 12,000 Business Park - - 4, ,100 1,700-16,900 27,000 Special Activity Area Business Area Total 1,400-5,000 3,300 1,700 27,100 8,500 1,100 59, ,000 Env Scientific Research Sports Facilities - - 6, ,000 Education Health - - 1, ,000 Special Area Total - - 8, ,000 Non Economic Area Total - - 1, ,200 3,800-4,700 12,000 Auckland City Total 82,900 3,400 38,000 71,300 8,700 78,100 41,600 1, , ,000 Total Table 4.8: Auckland City Retail Sector, 2007 RETAIL TYPE Sales ($m) Outlets (GU) Employment (MEC) Floorspace (m 2 ) Sales per Outlet ($m) MEC per Outlet Mean Floor space SUPERMARKETS $ 1, ,100 84,000 $ ,330 OTHER FOOD $ ,070 53,000 $ CAFES & RESTAURANTS $ 918 1,933 15, ,000 $ DEPARTMENT STORES $ ,520 71,000 $ ,070 APPAREL $ , ,000 $ FAH $ , ,000 $ OTHER RETAIL $ 1,309 1,882 7, ,000 $ HOUSEHOLD SERVICES $ ,000 $ AUTOMOTIVE $ 2,446 1,247 6, ,000 $ TOTAL $ 8,014 7,607 46,050 1,151,000 $ HARDWARE & DIY $ 1, , ,000 $ TOTAL inc HARDWARE $ 9,133 7,920 48,840 1,352,000 $ Source: Statistics NZ, 2008; RSDM,

71 4.2 Recent Trends - Retail and LFR Retail sector employment in Auckland City grew by 17% between 2001 and 2007, with an additional 6,700 persons engaged by Even though the rate of for both LFR and SFR was broadly similar (17%), LFR accounted for approximately 30% of employment growth. In floorspace terms, Auckland City has increased from 1,033,000m² in 2001 to 1,164,230m² in 2007, an annual average increase of 21,900m². LFR has consistently accounted for approximately 40% of total floorspace in the city; however the share of activity by retail sector has been more dynamic. The proportion of LFR floorspace in Other Food and Grocery has dropped from 12% to 6%, 5,400m² in 2001 compared with 3,330m² in There has been strong growth in SFR in the furniture, appliances and hardware sector with an additional 17,700m² between 2001 and 2007, while the quantity of LFR floorspace has remained broadly the same. Spatially, the proportion of floorspace that is located in Auckland City s centres has remained relatively consistent around 70% for both LFR and SFR floorspace. While for both years, the proportion of total floorspace located in business areas was around 20-21%, LFR was more likely to be located in business areas (24%) than SFR (18-19%). Approximately 10-11% of SFR floorspace and 4-5% of LFR was located in the special areas and non-economic areas for both 2001 and

72 Table 4.9: Auckland City Employment (MECs) by Spatial Economy

73 Table 4.10: Auckland City Floorspace (m²) by Spatial Economy Retail Demand Retail Demand compared with Retail Supply As noted, Auckland City s retail capacity exceeds demand by around 25%, or some 269,000 m². This arises mainly because the Auckland CBD is the regional centre, and has retail and service activity servicing the region-wide catchment as well as demand arising within Auckland City. The regional role is also evident for the major shopping destinations at Newmarket, St Lukes and Sylvia Park, all of which draw custom from the other TAs in the Region. 64

74 However, the net inflows are not spread evenly across all retail types. In net terms, Auckland is about self-sufficient for food and grocery floorspace, with a small undersupply in the supermarket compensated by the small net oversupply in other food retail. Moreover, supply in the department store sector is close to demand, reflecting the relatively wide distribution of these stores across the Region. In contrast, Auckland City has a large net over-supply in the café-restaurant sector, supported by the concentration of tourist and business activity and recreational destinations, and apparel, reflecting the presence of the region s main fashion precincts, and the natural concentration of more specialised apparel stores into the most central shopping destinations. For similar reasons, though to a lesser degree, the other retail, FAH and automotive sectors show some net over-supply in Auckland City. Table 4.11: Auckland City Retail Demand & Supply (m 2 ) 2007 RETAIL TYPE DEMAND SUPPLY (m2) (m2) NET (m2) NET % SUPERMARKETS 90,500 84,000-6, % OTHER FOOD 44,000 53,000 9, % CAFES & RESTAURANTS 121, ,000 58, % DEPARTMENT STORES 68,200 71,000 2, % APPAREL 78, ,000 44, % FAH 123, ,000 35, % OTHER RETAIL 146, ,000 58, % HOUSEHOLD SERVICES 7,100 9,000 1, % AUTOMOTIVE 222, ,000 45, % TOTAL 902,900 1,151, , % HARDWARE & DIY 180, ,000 21, % TOTAL inc HARDWARE-DIY 1,082,900 1,352, , % Future Retail Demand Retail demand growth is driven mainly by increases in population and household numbers, together with changes in spending levels per household. Growth in tourism and business activity also drives retail growth, though accounting for relatively small shares of total demand. As noted in Sections 2 and 3 of this report, increases in demand ($m of spend) do not translate directly into the same scale of increase in floorspace or retail employment. Long term gains in retail sector efficiency mean that sales per person engaged are likely to increase in real terms, while floorspace productivity (sales per m² per year) will also improve. This means that for any percentage increase in demand, there is likely to be a lesser increase in floorspace. As was the case for the Auckland Region analysis, the projections of retail demand and floorspace produced in this study draw on projections of population and household growth, tourism and business growth, and estimates of annual real growth in spending per households, and gains in floorspace productivity. For the assessment of future retail demand and floorspace needs, the core projections are: 65

75 Medium (Base) Medium population and household projections (Statistics NZ), 1% annual increase in real spend per household compounding , 0.5% annual increase in floorspace productivity, employment and business growth at the same rate as population growth, and tourism growth as per Ministry of Tourism (2007) forecasts; High High population and household projections (Statistics NZ), other growth as per the base projection; Low Low population and household projections (Statistics NZ), other growth as per the base projection. It is also recognised that Auckland City s retail sector will continue to have both a city-wide and a regional catchment, such that some of the growth in demand which is generated from the other TAs will be serviced by outlets in the CBD and other major centres elsewhere in Auckland City. Over time, the growth in each of the other cities and districts within the Region will see them become increasingly self sufficient in retail terms, and the share of their demand which leaks to Auckland will progressively reduce. However, it will not disappear, and the spatial structure of the Region means that Auckland City retail will continue to have regional roles, especially for more specialised goods. In broad terms, the floorspace growth in Auckland City which is sustained by growth outside the City is estimated at 30,000m 2 over the period 2007 to 2026, mainly in the Other Retail, Cafes and Restaurants, FAH and Apparel sectors (Appendix 8) Retail Demand Growth to 2026 The combined effects of household, business and tourism growth, as well as greater spend per household, will see the retail market growing by $5.4Bn in annual spend over the period, from the current $7.6Bn to $13.1Bn in 2026 (Table 4.12). This includes all retail, as well as hardware-diy spend. In the short term (to 2011) total projected growth is $978m, or $851m excluding automotive and hardware-diy. Key features of the retail demand growth include: i. Supermarket growth of $325m by 2016 and $766m by This growth equates to an annual average increase of $36m to 2016, and $40m per year until 2026; ii. Other Food and Grocery growth of $128m by 2016 and $302m by 2026, equating to an annual average increase of $14m to 2016, and $16m per year until 2026; iii. Cafes and Restaurants growth of $252m by 2016 and $596m by 2026, equating to an annual average increase of $28m to 2016, and $31m per year until 2026; iv. Department Store growth of $87m by 2016 and $204m by 2026, equating to an annual average increase of $10m to 2016, and $11m per year until 2026; 66

76 v. Apparel Store growth of $125m by 2016 and $297m by 2026, equating to an annual average increase of $14m to 2016, and $16m to 2026; vi. Furniture, Appliances and Hardware (FAH) growth of $179m by 2016 and $422m by 2026, equating to an annual average increase of $20m to 2016, and $22m to 2026; vii. Other Retail growth of $309m by 2016 and $729m by 2026, equating to an annual average increase of $34m to 2016, and $38m to 2026; viii. Automotive growth of $599m by 2016 and $1,396m by 2026, equating to an annual average increase of $67m to 2016, and $73m to 2026; ix. Hardware-DIY growth of $301m by 2016 and $696m by 2026, equating to an annual average increase of $33m to 2016, and $37m to Table 4.12: Auckland City Retail Demand ($m) RETAIL TYPE MEDIUM SUPERMARKETS $ 1,104 $ 1,240 $ 1,429 $ 1,869 $ 136 $ 325 $ % 69% OTHER FOOD $ 436 $ 490 $ 564 $ 738 $ 54 $ 128 $ % 69% CAFES & RESTAURANTS $ 604 $ 713 $ 855 $ 1,199 $ 109 $ 252 $ % 99% DEPARTMENT STORES $ 307 $ 344 $ 394 $ 511 $ 36 $ 87 $ % 66% APPAREL $ 361 $ 414 $ 486 $ 657 $ 53 $ 125 $ % 82% FAH $ 627 $ 701 $ 806 $ 1,049 $ 75 $ 179 $ % 67% OTHER RETAIL $ 976 $ 1,106 $ 1,285 $ 1,705 $ 131 $ 309 $ % 75% HOUSEHOLD SERVICES $ 36 $ 40 $ 46 $ 60 $ 4 $ 10 $ 24 28% 66% AUTOMOTIVE $ 2,103 $ 2,355 $ 2,702 $ 3,499 $ 252 $ 599 $ 1,396 29% 66% TOTAL $ 6,553 $ 7,404 $ 8,568 $ 11,287 $ 851 $ 2,016 $ 4,735 31% 72% HARDWARE & DIY $ 1,082 $ 1,208 $ 1,382 $ 1,777 $ 126 $ 301 $ % 64% TOTAL inc HARDWARE $ 7,634 $ 8,612 $ 9,951 $ 13,064 $ 977 $ 2,316 $ 5,430 30% 71% RETAIL TYPE HIGH GROWTH SUPERMARKETS $ 1,104 $ 1,263 $ 1,476 $ 1,979 $ 159 $ 372 $ % 79% OTHER FOOD $ 436 $ 499 $ 583 $ 781 $ 62 $ 146 $ % 79% CAFES & RESTAURANTS $ 604 $ 718 $ 869 $ 1,242 $ 115 $ 265 $ % 106% DEPARTMENT STORES $ 307 $ 350 $ 407 $ 540 $ 42 $ 99 $ % 76% APPAREL $ 361 $ 419 $ 497 $ 687 $ 58 $ 137 $ % 90% FAH $ 627 $ 714 $ 833 $ 1,111 $ 88 $ 206 $ % 77% OTHER RETAIL $ 976 $ 1,123 $ 1,322 $ 1,795 $ 148 $ 346 $ % 84% HOUSEHOLD SERVICES $ 36 $ 41 $ 47 $ 63 $ 5 $ 12 $ 27 33% 76% AUTOMOTIVE $ 2,103 $ 2,381 $ 2,756 $ 3,626 $ 278 $ 653 $ 1,523 31% 72% TOTAL $ 6,553 $ 7,507 $ 8,789 $ 11,825 $ 955 $ 2,236 $ 5,273 34% 80% HARDWARE & DIY $ 1,082 $ 1,218 $ 1,403 $ 1,826 $ 137 $ 322 $ % 69% TOTAL inc HARDWARE $ 7,634 $ 8,725 $ 10,192 $ 13,651 $ 1,091 $ 2,558 $ 6,017 34% 79% RETAIL TYPE LOW GROWTH SUPERMARKETS $ 1,104 $ 1,222 $ 1,387 $ 1,761 $ 118 $ 283 $ % 60% OTHER FOOD $ 436 $ 483 $ 548 $ 695 $ 47 $ 111 $ % 59% CAFES & RESTAURANTS $ 604 $ 708 $ 838 $ 1,130 $ 105 $ 235 $ % 87% DEPARTMENT STORES $ 307 $ 339 $ 383 $ 484 $ 32 $ 76 $ % 57% APPAREL $ 361 $ 410 $ 474 $ 621 $ 49 $ 114 $ % 72% FAH $ 627 $ 691 $ 782 $ 990 $ 64 $ 155 $ % 58% OTHER RETAIL $ 976 $ 1,092 $ 1,250 $ 1,608 $ 117 $ 274 $ % 65% HOUSEHOLD SERVICES $ 36 $ 39 $ 44 $ 56 $ 4 $ 9 $ 20 24% 57% AUTOMOTIVE $ 2,103 $ 2,334 $ 2,653 $ 3,372 $ 232 $ 550 $ 1,269 26% 60% TOTAL $ 6,553 $ 7,319 $ 8,359 $ 10,718 $ 766 $ 1,807 $ 4,165 28% 64% HARDWARE & DIY $ 1,082 $ 1,200 $ 1,364 $ 1,734 $ 118 $ 283 $ % 60% TOTAL inc HARDWARE $ 7,634 $ 8,518 $ 9,723 $ 12,451 $ 884 $ 2,089 $ 4,817 27% 63% Retail Floorspace Growth to 2026 The growth in retail demand will drive substantial increases in retail floorspace in Auckland City. Under the medium growth future, total retail floorspace is expected to increase from 1,151,000m 2 in 2007 to 1,720,000m 2 in 2026, an increase of 569,000m 2 (49%) (Table 4.13). The projected total growth to

77 is 252,000m 2 at an annual average rate of 28,000m 2. If the hardware-diy sector is included, then total projected growth is 666,000m 2, with 295,000 m 2 by 2016 an annual average rate of 33,000 m 2. Key features of the projections include: i. The largest projected increases are in the automotive and cafes and restaurant sectors, with 121,000m 2 (18% of total growth) and 106,000m 2 (16% of total growth) respectively. ii. There is also significant growth in the other retailing and DIY sectors. Growth in DIY floorspace is estimated at 97,000m 2, with annual growth of 5,100m 2. Growth in other retailing floorspace is estimated at 96,000 m 2, with annual growth of around 5,000m 2. iii. The food and grocery sector, including supermarkets, accounts for 75,000m 2 over the period (11% of total growth). iv. The comparison retail sector has projected growth of 263,000 m 2 or 39% of the total, an annual average increase of 13,800m 2. Aside from the other retailing sector discussed earlier, this growth includes 72,000m 2 furniture, appliances and hardware floorspace, 59,000m 2 apparel floorspace, and 36,000m 2 department store floorspace. Table 4.13: Auckland City Retail Floorspace by Storetype RETAIL TYPE 2007 AUCKLAND CITY GROWTH AUCKLAND CITY TOTAL MEDIUM GROWTH SUPERMARKETS 84,000 9,300 21,800 35,300 49,600 93, , , ,000 OTHER FOOD 53,000 4,500 10,600 17,200 24,100 58,000 64,000 71,000 78,000 CAFES & RESTAURANTS 180,000 19,600 44,000 70,900 99, , , , ,000 DEPARTMENT STORES 71,000 6,700 15,800 25,400 35,600 78,000 87,000 96, ,000 APPAREL 123,000 10,000 23,100 37,300 52, , , , ,000 FAH 158,000 12,100 28,500 46,200 64, , , , ,000 OTHER RETAIL 205,000 16,600 38,500 62,200 87, , , , ,000 HOUSEHOLD SERVICES 9, ,600 2,600 3,700 10,000 11,000 12,000 13,000 AUTOMOTIVE 268,000 22,000 51,700 83, , , , , ,000 TOTAL 1,151, , , , ,000 1,259,000 1,403,000 1,555,000 1,720,000 HARDWARE & DIY 201,000 17,900 42,300 67,900 94, , , , ,000 TOTAL inc DIY 1,352, , , , ,300 1,478,000 1,647,000 1,826,000 2,018,000 RETAIL TYPE HIGH GROWTH SUPERMARKETS 84,000 11,100 25,500 41,100 57,900 95, , , ,000 OTHER FOOD 53,000 5,400 12,400 20,000 28,200 59,000 66,000 73,000 82,000 CAFES & RESTAURANTS 180,000 20,700 46,700 75, , , , , ,000 DEPARTMENT STORES 71,000 8,000 18,400 29,600 41,600 79,000 89, , ,000 APPAREL 123,000 11,100 25,500 41,200 58, , , , ,000 FAH 158,000 14,600 33,600 54,200 76, , , , ,000 OTHER RETAIL 205,000 19,200 43,900 70,700 99, , , , ,000 HOUSEHOLD SERVICES 9, ,900 3,100 4,300 10,000 11,000 12,000 14,000 AUTOMOTIVE 268,000 25,100 58,200 93, , , , , ,000 TOTAL 1,151, , , , ,300 1,275,000 1,434,000 1,607,000 1,796,000 HARDWARE & DIY 201,000 19,700 45,800 73, , , , , ,000 TOTAL inc DIY 1,352, , , , ,400 1,496,000 1,682,000 1,884,000 2,102,000 RETAIL TYPE LOW GROWTH SUPERMARKETS 84,000 7,800 18,400 29,700 41,400 92, , , ,000 OTHER FOOD 53,000 3,800 9,000 14,500 20,200 57,000 62,000 68,000 74,000 CAFES & RESTAURANTS 180,000 18,700 40,700 63,400 87, , , , ,000 DEPARTMENT STORES 71,000 5,600 13,300 21,500 29,900 77,000 84,000 93, ,000 APPAREL 123,000 9,100 20,600 32,600 45, , , , ,000 FAH 158,000 10,000 23,900 38,800 54, , , , ,000 OTHER RETAIL 205,000 14,500 33,300 53,200 73, , , , ,000 HOUSEHOLD SERVICES 9, ,300 2,200 3,000 10,000 10,000 11,000 12,000 AUTOMOTIVE 268,000 19,400 45,800 73, , , , , ,000 TOTAL 1,151,000 89, , , ,100 1,247,000 1,367,000 1,500,000 1,637,000 HARDWARE & DIY 201,000 16,500 39,300 63,100 87, , , , ,000 TOTAL inc DIY 1,352, , , , ,500 1,465,000 1,608,000 1,766,000 1,928,000 68

78 4.3.5 Growth in LFR Floorspace The growth in retail demand means there will be substantial growth in LFR floorspace in Auckland City over the next two decades. Under the Medium growth future, total LFR floorspace is expected to increase from 450,000m 2 in 2007 to 692,000m 2 in 2026, an increase of 242,000m 2 at an annual average rate of 12,700 m 2 (Table 4.14). The projected total growth to 2016 is 108,000m 2 at an annual average rate of 12,000 m 2. Key features of the LFR projections include: i. Large format floorspace growth is relatively concentrated, with supermarkets, department stores, FAH, hardware-diy and other retailing accounting for the major shares; ii. The largest projected increase is in the hardware-diy sector, with 92,000m 2 or nearly 28% of total LFR growth; iii. Substantial growth is expected in furniture, appliances and hardware (53,900m 2 ), supermarkets (49,600m 2 ), other retailing (47,800m 2 ), and department stores (33,800m 2 ). Together, these storetypes are expected to generate some 185,100m 2 LFR floorspace, at 9,700m 2 per year. iv. The automotive sector is expected to generate 24,100m 2 LFR demand by Table 4.14: Auckland City Retail LFR Floorspace by Storetype RETAIL TYPE 2007 AUCKLAND CITY GROWTH AUCKLAND CITY TOTAL MEDIUM GROWTH SUPERMARKETS 82,000 9,300 21,800 35,300 49,600 91, , , ,000 OTHER FOOD 3,000 1,200 2,700 4,400 6,200 4,000 6,000 7,000 9,000 CAFES & RESTAURANTS 34,000 1,600 3,500 5,700 8,000 36,000 38,000 40,000 42,000 DEPARTMENT STORES 71,000 6,400 15,000 24,100 33,800 77,000 86,000 95, ,000 APPAREL 9,000 3,400 7,800 12,500 17,700 12,000 17,000 22,000 27,000 FAH 78,000 10,100 23,700 38,400 53,900 88, , , ,000 OTHER RETAIL 41,000 9,100 21,100 34,000 47,800 50,000 62,000 75,000 89,000 HOUSEHOLD SERVICES 2, ,000 2,000 2,000 2,000 AUTOMOTIVE 130,000 4,600 10,700 17,300 24, , , , ,000 TOTAL 450,000 45, , , , , , , ,000 HARDWARE & DIY 141,000 17,500 41,200 66,200 92, , , , ,000 TOTAL inc DIY 591,000 63, , , , , , , ,000 RETAIL TYPE HIGH GROWTH SUPERMARKETS 82,000 11,000 26,000 41,000 58,000 93, , , ,000 OTHER FOOD 3,000 1,000 3,000 5,000 7,000 4,000 6,000 8,000 10,000 CAFES & RESTAURANTS 34,000 2,000 4,000 6,000 9,000 36,000 38,000 40,000 43,000 DEPARTMENT STORES 71,000 8,000 18,000 28,000 40,000 79,000 89,000 99, ,000 APPAREL 9,000 4,000 9,000 14,000 20,000 13,000 18,000 23,000 29,000 FAH 78,000 12,000 28,000 45,000 63,000 90, , , ,000 OTHER RETAIL 41,000 11,000 24,000 39,000 55,000 52,000 65,000 80,000 96,000 HOUSEHOLD SERVICES 2, ,000 2,000 2,000 2,000 AUTOMOTIVE 130,000 5,000 12,000 19,000 27, , , , ,000 TOTAL 450,000 54, , , , , , , ,000 HARDWARE & DIY 141,000 19,000 45,000 72, , , , , ,000 TOTAL inc DIY 591,000 73, , , , , , , ,000 RETAIL TYPE LOW GROWTH SUPERMARKETS 82,000 8,000 18,000 30,000 41,000 90, , , ,000 OTHER FOOD 3,000 1,000 2,000 4,000 5,000 4,000 5,000 7,000 8,000 CAFES & RESTAURANTS 34,000 2,000 3,000 5,000 7,000 36,000 37,000 39,000 41,000 DEPARTMENT STORES 71,000 5,000 13,000 20,000 28,000 76,000 84,000 91,000 99,000 APPAREL 9,000 3,000 7,000 11,000 15,000 12,000 16,000 20,000 24,000 FAH 78,000 8,000 20,000 32,000 45,000 86,000 98, , ,000 OTHER RETAIL 41,000 8,000 18,000 29,000 40,000 49,000 59,000 70,000 81,000 HOUSEHOLD SERVICES 2, ,000 2,000 2,000 2,000 AUTOMOTIVE 130,000 4,000 10,000 15,000 21, , , , ,000 TOTAL 450,000 39,000 91, , , , , , ,000 HARDWARE & DIY 141,000 16,000 38,000 62,000 85, , , , ,000 TOTAL inc DIY 591,000 55, , , , , , , ,000 69

79 High and Low Futures The High growth future would see LFR floorspace growth at a rate about 5% above the Medium future, with an additional 279,000m 2 of floorspace by 2026, at an annual rate of 14,700m 2. Including hardware- DIY, the projected growth is 379,000m 2 by 2026, an annual rate of 19,900m 2. That would mean Auckland City s total LFR floorspace reaching 729,000m 2 by 2026 (970,000m 2 with hardware-diy). The Low growth future would see increases about 5% lower than the Medium future, with an additional 202,000m 2 of LFR floorspace by 2026 (287,000m 2 with hardware-diy). The implied annual rate is 10,600m 2, or 15,100m 2 including hardware-diy. The City s total LFR floorspace would be 652,000m 2, or 878,000m 2 including hardware-diy Retail Land Requirements The floorspace growth implies direct land requirements for retail over the next two decades. These requirements vary according to the retail format - large format retail development typically occupies 35-40% of sites, with adjacent parking at grade, while smaller format retail has generally greater site coverage and development intensity, in excess of 55% and up to 70%. However, the increasing intensity of land use in Auckland City and its consequent effects on the costs of land, suggests that future LFR development in Auckland is likely to have higher effective site coverage than the national norms. For example, LFR development with associated under-croft parking can achieve site coverage in excess of 70%. Similarly, expansion and/or re-development of existing centres often results in a mix of intensification of existing sites and outward expansion, so that the effective site coverage for floorspace expansion is high, over 75%. Certainly, not all new development would achieve such high intensity, but the mix of standard and higher intensity development is likely to see the average intensity, city-wide, at a higher level than in the past, and increasing over time. Accordingly, two scenarios have been applied here, to show the likely land requirements implied by the retail floorspace growth projections. These exclude the CBD, where additional retail space will be provided largely through intensification of existing sites, including expansion of the retail component of ground floor areas over time: i. High Land scenario: a. LFR achieves an average site coverage of 42%, increasing to 47% by 2026 (annual gain of 0.75%); b. SFR achieves an average site coverage of 55%, increasing to 62% by ii. Low Land scenario: a. LFR achieves an average site coverage of 55%, increasing to 59% by 2026 (annual gain of 0.5%); b. SFR achieves an average site coverage of 65%, increasing to 70% by

80 Both scenarios allow for 15% of total Auckland City floorspace growth to be accommodated in the CBD (10% of LFR and 20% of SFR), and the land requirements are only for areas outside the CBD. The implied land requirements for retail are summarised in Table The High Land scenario, with lower site coverage levels, would see a requirement of 49ha by 2016, and 103 ha by This equates to an annual average requirement of some 5.5ha throughout the period. The Low Land scenario, with higher site coverage by retail, would see a requirement of 44ha by 2016, and 94 ha by This equates to an annual average requirement of around 4.9ha throughout the period. Table 4.15: Auckland City Retail Land Requirements RETAIL TYPE Increase % Retail Floorspace (m2) LFR 57, , , ,000 SFR 50, , , ,000 TOTAL 107, , , ,000 HIGH DEMAND (Lower Site Coverage) LFR Coverage 0.75% 42% 44% 45% 47% SFR Coverage 0.75% 60% 62% 65% 67% LFR LAND 135, , , ,600 SFR LAND 83, , , ,300 TOTAL 219, , ,100 1,034,900 LOW DEMAND (Higher Site Coverage) LFR Coverage 0.50% 50% 51% 53% 54% SFR Coverage 0.50% 65% 67% 68% 70% LFR LAND 114, , , ,800 SFR LAND 76, , , ,700 TOTAL 190, , , ,500 Land Requirement (Ha) HIGH LOW Land Requirement (Ha/Yr) HIGH LOW The High and Low retail growth scenarios imply a range of +/- 15% around these projections. This would place the High Land scenario in the ha/year range, and the Low Land scenario in the ha/year range. Either way, there is a substantial and ongoing land requirement to accommodate growth in the Auckland retail sector, in the order of ha by 2016 (low 38ha, high 57ha). One obvious question is where this demand can, or is likely to be, accommodated. 71

81 4.4 Assessment of District Plan Provisions and Future Capacity Auckland City s operative District Plan provides for business activity in a range of business and mixed use zones. To some degree, the business zone provisions and their locations distinguish between commercial and industrial areas. However, there is considerable overlap in the range of activities provided for in different zones, so that the City is not structured spatially into discrete commercial and industrial areas. There are nine main business zonings and one mixed use zone which specify the intended character and mix of activities for each zone. The intention of the business zone provisions is to allow for flexibility and wider location choice for a range of businesses. However, there is also recognition that market forces may result in undesirable patterns of economic development. A particular issue is that existing built resources in established centres may become underutilised as large format retailers locate out of centre. The current District Plan uses thresholds determined by gross floor area size to determine whether a proposed retail or other development is subject to the resource consent procedure. This gross floor area threshold is the main planning mechanism used in the District Plan Retail Capacity The potential capacity for retail activity is influenced by a range of factors, including existing uses, existing built intensity, competing uses, site conditions, market conditions, as well as property characteristics and ownership. These factors vary through time and by location, so it is not possible to definitively assess retail capacity. Nonetheless, it is possible and necessary for planning purposes to develop broad estimates of retail capacity potential by taking into account the characteristics of centres and business areas, and the underlying processes of commercial development across the spatial economy. These characteristics have been combined here with the details of the business zones and zoned areas, to provide estimates (medium, high and low) of retail potential across the spatial economy, and in each of the Isthmus DP catchments. This has been done using a five step approach: 1. Spatial organisation; defining the eleven District Plan catchments and the spatial economy by meshblock and CAU (Map 4.1); 2. Estimating areas (ha) for each business zone in each catchment and centre/business area, by intersecting the current District Plan zoning files by meshblock using GIS. This is based on the 72

82 actual zoned area of business land, and excludes roads and other zones. Note that this excludes most of the CBD as that is not part of the Isthmus DP catchments; 3. Estimating potential for built development (floorspace footprints or ground floor area ratios) within each zone development based on our interpretation of the District Plan. This is simply the estimated average ground floor area as a percentage of the zoned land area. This allows for other uses, especially car park areas and open spaces, to occupy a share of the zoned area. We note that because the District Plan is enabling in nature, these estimates are based on what is considered realistic for the zone, rather than the maximum potential development that could occur according to the District Plan rules. 4. Estimating the share of ground level and upper level floorspace likely to be taken up by retail activity (as distinct from services, banks, etc). The retail shares for ground level floorspace vary considerably between the business zones. The upper level estimates allow for low retail shares (typically less than 2%), as well as the likely average number of levels for each zone., and then applied a share of total activity above ground that would be retail related. We have applied a small share of around 2%, because it is unlikely that a lot of retail will be focussed on second storeys unless it is in malls or integrated developments. 5. Combining these steps, the retail potential has been calculated in terms of floor area (m 2 ) at ground level and upper levels, as per: Zoned area x % site coverage x retail % share = ground level retail m 2. % site coverage x n. of levels x retail % share = upper level retail m 2. Retail potential = ground level retail + upper level retail. Map 4.1: Auckland City Isthmus District Plan Catchments 73