Patel believes new stock entering the market late next year will boost retail supply to new levels, but expectations of tenant demand and new benchmark rents will need to be managed over the long term.
"Due to the already high lease costs associated with shopping malls, coupled with percentage rents, high overheads and high total occupancy costs; I believe it will be difficult for some retailers to sustain affordable sales revenue," says Patel.
"Landlords need to recognise this and look at the overall lease structure; not just focus on the highest rental values in order to add value to their assets over the long run.
"Having good long-term tenants is rare; this should take priority over which tenant is willing to pay more for the space."
Precinct Properties reports there was pre-commitment of almost 80 per cent for Commercial Bay retail space.
"With some of the highest foot traffic in the CBD recorded on the corner of Queen and Customs Sts, Commercial Bay is perfectly placed to benefit from this location," Patel says.
Precinct research indicates 230,000 passengers arrive at Downtown CBD via cruise shipannually and an estimated 30,000 people work within 500m of the Commercial Bay precinct.
The Auckland CBD worker population is predicted to grow at an average 1.8 per cent per annum, from 92,000 in 2014 — to 125,000 by 2031.
At Westfield Newmarket, a retail catchment analysis from MacroPlan Dimasi shows a trade area population of almost 544,000 residents and an estimated $9.3 billion retail spend. Total retail spend per capita in the main trade area in 2017 is estimated at $18,754 — 18 per cent above the Auckland regional average of $15,866.
"Landlords needs to understand their catchment, competitors and tenant covenant to be successful in today's environment," Patel points out. However, despite these challenges there are clear benefits to the new developments.
"This level of new supply to our market now enables new international brands to enter the Auckland central city retail scene. This will provide the consumer with a variety of retail choices that will ultimately enhance the consumer's shopping experience," says Patel.
"If pricing structures are competitive, relative to international markets, it will encourage consumers to shop locally rather than online from their favourite international stores."