Cheryl Adamson: The power of landowners to create good town centre retail mix

An artist's impression of proposed upgrades to enhance walking and cycling on Queen St in Auckland. Photo / Supplied

Opinion

OPINION:

The history that led up to Auckland Council's recent focus on Queen St's makeover has certainly highlighted their ability to fragment and negatively disrupt a shopping area.

But encouragingly, the debate around process and design has also brought to light the collective power landowners can possess if they unite for a single objective.

The new world of land ownership

With multi-landowner landscapes dominating the majority of town centres, this cooperation seldom occurs in day-to-day business. While the likes of Westfield plan their tenant mix and optimise trading densities, town centres remain vulnerable as they wait for one visionary to pop their head above the parapet to lead the way.

Every now and again, there really is a visionary that develops a key property and transforms a precinct, leaving their legacy to witness for decades on. However, without that, the scenario is often fuelled by a silo-mentality held by some landowners, and risks slowing down the evolution of many town centres.

Without doubt, local ownership by engaged property developers is a huge advantage, especially if they collectively work together on a mini precinct, like Faraday St in Parnell. But when a few, sometimes remote and often disengaged owners adopt independently driven lease objectives, the outcome is often more complicated.

The strength behind convenience retail

One complication derived from this silo-mentality can be the erosion of convenience retail. Often "unsexy" in a premium boutique shopping district, convenience retail is a necessity that is frequently overlooked. Although typically attracting the least rental, its presence in malls is proven to drive much needed foot traffic to surrounding areas.

According to Retail NZ, the average Kiwi spends $22,577 in retail every year. A majority of this healthy sum goes towards daily necessities, with over 20 per cent of discretionary income spent at supermarkets, just shy of 7 per cent on fuel and over 5 per cent on pharmaceutical and other in store-based retailing.

Given these retailers were all considered essentials throughout the pandemic, this assisted precincts with a strong convenience retail presence to maintain relevance.

After spending on the likes of food and beverage services, motor cars, electronic goods, and not to forget GST, this leaves only 12 per cent for the average Kiwi to lavish out on the retail that comprises most town centres - namely clothing, giftware, specialist retail and home and decor.

It's not hard to draw the conclusion that unless a main street or town centre has a good representation of core convenience, or otherwise another destination driver, vulnerability is inevitable.

This vulnerability is also triggered by the organic, irreversible erosion of banks and postal services from several smaller precincts. A result of less demand for walk-in services coupled with the growth of online shopping, this transformation has meant that convenience retail and the foot traffic it brings with it continues to dwindle.

Maintaining vibrancy in town centres

We've all anticipated witnessing a string of casualties from Covid-19 and its various lockdowns leading up to this winter. Despite retailers and hospitality operators being initially buoyed up by the wage subsidy, vulnerable businesses are now having to review their options to survive.

These closures of certain non-essential, discretionary retail stores are testing the resilience of many precincts and town centres. This raises the question – should landowners not be reviewing the potential demand for convenience stores?

Covid-19 has transformed not only our workplaces with flexible arrangements, but also how we as consumers have grown to stick to our roots and support local. Especially if a local store environment is clean and not overcrowded, the mid-week grocery top-up no longer warrants a major trip to the mall. Extra costs can also be justified if the produce is fresh, and the proprietor is personal and welcoming.

Cheryl Adamson, general manager of Parnell Business Association. Photo / Supplied

Paul Winstanley confirms this trend in JLL's Q1 market snapshot, stating, "Assets that help to provide essential services or support core societal needs are undoubtedly outperforming more wants-based real estate opportunities in the present climate."

This gap existing within many precincts also presents the opportunity to work towards improving sustainability and mindful consumerism; using fresh, locally grown food, limiting packaging and creating experiences reminiscent of what has driven us out to marketplaces or city squares for centuries.

Convenience retail has always been the glue - without it, high streets and town centres become a fragile string of discretionary retail, narrowly held together by an array of hospitality and service options.

Landowners should be working together and seizing the chance to create their legacies by transforming town centres into resilient, progressive and sustainable spaces. This involves catering to public demands by supporting distinct drivers of convenience which can still hold their own within a town centre.

• Cheryl Adamson is general manager of Parnell Business Association.