Mall expansion pays for itself

Property Editor·NZ Herald·

23 Oct, 2015 04:00 PM4 mins to read

Lauren Riley and Chris Gudgeon have high hopes for the newly developed and much expanded New Lynn mall. Photo / Doug Sherring

Revaluation gains and extra retail spending will mean LynnMall's $39 million extensions could quickly pay for themselves.

Chris Gudgeon, chief executive of NZX-listed Kiwi Property which owns the centre, explained the financial logic behind the mall's biggest additions since its 1963 opening as the country's first American-style mall.

Valuers have projected an $18 million one-off development margin on completion next month, Gudgeon said.

"So we spent $39 million but it [the new buildings] will be worth $57 million," he said.

Kiwi will be able to take that amount into its bottom line as an unrealised non-cash item when its annual accounts appear for this current financial year.

That will appear along with all other property revaluations including the increasingly valuable Sylvia Park.

It was announced this month that Kiwi had secured one of the world's biggest clothing retailers, H&M, for Sylvia Park where that chain will open its first New Zealand outlet, giving the Mt Wellington mall a big boost. Kiwi might now secure more H&M outlets at its many other malls in Hamilton, Palmerston North, Wellington and Christchurch.

In addition to LynnMall's $18 million development margin, the retail spending boost from the new entertainment and dining precinct will also swell the coffers. That amounts to a projected extra approximately $20 million of annual sales, says centre manager Lauren Riley.

The current annual $180 million retail sales were projected to rise above $200 million when the Reading Cinemas and The Brickworks were open and trading, she said.

Not only does Kiwi expect more shoppers because of those extensions, but many customers will also potentially stay much longer, extending LynnMall's trading day by some hours and potentially adding further benefits to the existing shops and certainly enhancing leasing prospects.

The cinemas will be open until late in the evening and diners will be arriving for breakfast, lunch and dinner.

Parking at the mall is difficult during the extensions, with so many trades vans taking up shopper carparks. However, once the work is finished and more than half a hectare of extra buildings have been added into LynnMall's former carparking areas, no existing carparking spaces will be lost.

That is because carparks were developed beneath the cinemas and where The Brickworks took up carparking space, the existing parking areas are being reconfigured to ensure the total parks remain at around 1400.

Gudgeon said architects Buchan Group had designed a layout which would give shelter for outdoor diners.

"There's been a huge amount of thought put into the plan. We wanted to do something that was urban and not classic mall, but also to bring urban chic into New Lynn."

The seven new restaurants will be a big boost for the centre. Gudgeon said they reflected and catered for Auckland's ethnically diverse population.

"We've got a whole bunch of passionate foodies who are not mainstream. This is more of an urban dining experience in a funky environment which people enjoy in places like Britomart and Ponsonby Rd." .

All the restaurants offer big al fresco dining areas, with large fixed canopies and overhangs built as part of their structures specifically catering for the inside/outside experience down the north-facing street for maximum sunlight.

A new mini putt course has also been built. That activity rose to prominence in the 1960s and 1970s so Kiwi decided that was a fitting addition to the country's original mall. Goode Brothers' restaurant faces the golf course, allowing parents to keep a close eye on youngsters while dining.

Derek Battersby, of the Whau Local Board, praised the investment but is worried about a lack of presence on one frontage.

"Kiwi has not created a more active retail frontage to Memorial Drive. This effectively separates old New Lynn CBD area from the mall and transport hub.

"It's almost [as] if Kiwi are scared to invest at the western end of the mall."

But Gudgeon indicated that Kiwi planned to further develop some of the land now used for carparking but that was in the longer term.