JUNE 2014 QUEENSTOWN COMMERCIAL AND INDUSTRIAL There is an air of confidence and op mism in Queenstown. Popula on growth is one of the highest in New Zealand as Queenstown draws people from both within New Zealand and from overseas. Tourism, the founda on of the Queenstown economy, con nues to expand while the growth of the local economy provides opportuni es for new enterprises and exis ng ones to grow. As a consequence of the strong economic condi ons, market ac vity for commercial and industrial property is on the increase and significant developments are on the horizon. Investors have always looked favourably upon the Queenstown commercial and industrial markets and this con nues to be the case. With more development, investment opportuni es are on the increase, commercial and industrial space remains in demand and most property sectors are showing limited vacancy. RETAIL The general growth of Queenstown s economy in parallel with the expansion of the tourism sector con nues to drive retail growth but on two separate fronts. The Central Business District (CBD) remains the focus for tourism spending while the Frankton Flats and Remarkables Park area has increasingly become the favoured shopping loca on for the local popula on. The CBD benefits from its proximity to the established adjacent tourism accommoda on which offers visitors ready access to the wide range of fashion, While the CBD in general is sought a9er, there are clearly parts of the CBD that are considered be=er than others. The map The CBD is a sought a9er loca on for (over page) shows the grading of loca ons retailers and there is currently a backlog of in 2014 according to Bayleys Research. businesses looking for opportuni es to set Loca ons and grading is an evolving up shop. Si;ng tenants, in some cases, are process. As the scale of tourism in also looking for opportuni es to relocate to Queenstown expands, it is an cipated that preferred outlets within the CBD. Key the CBD s prime retail area will enlarge as money is being paid to secure the right well. Retailers will look at opportuni es to posi on and, for the prime loca ons, this is access the growing consumer spending in an cipated to remain a feature of the the area which may include an ini al market. souvenir and food and beverage retail that is available.
Popula on growth in the QueenstownWaka pu ward has been one of the highest recorded in New Zealand according to the 2013 census. Between 2001 and 2013, the popula on increased from just over 10,656 to 16,722, an increase of over 6,100 people or 57%. Similar growth rates were recorded across the Queenstown Lakes District Council area. The regional draw that the retail offering at Frankton Flats has will cater for consumer needs of this growing popula on beyond the Queenstown City boundaries. Another significant proposed development on Frankton Flats is at Shotover Park. It is an cipated that the final development will comprise a mix of uses which will include large format retail, smaller scale retail posi oning on the fringes. This creep is already evident in the CBD and this will result in a greater variety of retail, more pedestrian traffic and a general li9 in ac vity that will eventually li9 the grading of these fringe loca ons. The long an cipated development of the Five Mile site is finally progressing into the construc on stage. The Queenstown Gateway retail facility has resource consent approval and is in the final stages of a obtaining a building consent. The Queenstown Gateway Mall, which includes a Countdown supermarket as the anchor tenant, will help meet the shopping demands of a rapidly expanding consumer base. 18,000 Queenstown-Wakatipu Ward Resident Population 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2001 2006 2013 Source: StatsN Z, Bayleys Research
along with industrial uses. Pac n Save and Mega Mitre 10 stores have already been granted Resource Consent. Comple on of all these retail developments will provide the Queenstown and surrounding popula on with a huge variety of shopping facili es. The new developments at Queenstown Gateway and Shotover Park will complement and compete against the established Remarkables Park Shopping Centre. For the first me Queenstown consumers will have a choice of where they shop with op ons ranging from small specialist retail shops through to large bulk retail outlets. Small to medium size investors con nue to show strong interest in securing CBD retail property. Market condi ons are en cing with well located CBD retail property con nuing to a ract strong tenant demand with instances of key money being paid, vacancy is almost non-existent and prime rental rates have historically trended up. Yields reflect the strong demand with Prime sales recording ini al yields between 4.5% and 5.5% while secondary loca ons show a similar 4.5% low but with a higher upper level of 6.0%. OFFICE Office users in Queenstown tend to be associated with the service sector and government catering to local businesses and the community. While there is a manageable amount of vacant space in Queenstown, tenant demand for the office accommoda on that is available remains generally subdued. There are cases of good quality space remaining vacant for an extended period of me. As a consequence, rental levels have remained largely unchanged over recent years Office accommoda on in Queenstown is o en located on the first floor with retail featured on the ground floor. Investment sales invariably reflect this with the usually strong investment demand for retail, especially in the CBD, driving yields down to as low as 5.0%.
INDUSTRIAL Queenstown Lakes District Council (QLDC) has signalled through reports, a poten al shortage of industrial land as the district grows. The development of the Glenda Drive Industrial Estate and the expansion of the Shotover Park industrial subdivision on Frankton Flats were seen as addressing this issue. The recent approval of the Pac n Save and Mitre 10 stores has set the scene for the poten al future approval of other bulk retail in industrial areas placing further pressure on the available industrial land around Queenstown. CONFERENCE CENTRE A proposed new Conference Centre, on the Lakeview site, at the top of Man Street overlooking central Queenstown is under considera on by the QLDC. In the Council document that requested community response to the proposal, the an cipated cost of $52.5 million would see funding as follows: $29.9 million: QLDC to contribute for construc on and infrastructure $3.2 million: QLDC to provide working capital for the first 5 years $20 million: External funding The Conference Centre will cater for up to 750 people with a targeted opening date of 2016. It is forecast the new facility will bring more interna onal and domes c
visitors to Queenstown, especially in the off -peak and shoulder seasons. It is also jus fied on the grounds that it will act as a catalyst for other economic development throughout the region, provide a venue for large events such as expos and concerts as well as catering for smaller events such as weddings and balls. QLDC has backed the Lakeview site given its scale and its central loca on is seen as keeping tourism concentrated around the CBD where it would be supported by the exis ng tourism infrastructure including hotel accommoda on and retail outlets. A rival Conven on Centre at Remarkables Park has also been proposed. Private equity would fund the project with the facility catering for up to 650 people si ng for dinner and up to 1,000 delegates in a lecture format according to media releases by Remarkables Park.