Rents down – but remain right up there

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Queenstown retail and office rents are said to be decreasing yet prime space in the resort remains among the most expensive in the country. 

Those are the key conclusions of a recent report by Queenstown Lakes District Council analyst Ralph Henderson. 

Drawing on data from Statistics New Zealand and realtor Colliers International, Henderson
“identifies retail and commercial trends” in the resort. 

“A substantial increase in commercial developments” in Queenstown’s CBD, plus a number in Frankton, “have created a significant increase in office and, to a lesser extent, retail space” over two years, he says. 

Those new CBD developments Henderson is talking

about include The Mountaineer, Post Office Precinct, Skyline’s 24 Rees Street and the large new Church St complex. 

In Frankton there’s Terrace Junction, the Frankton Village extension and the continuing Remarkables Park expansion. 

“Office rents, and to a lesser extent retail rents, have softened as a result of continuing new space coming online,” Henderson says. 

Particularly with offices, “landlords are offering significant leasing incentives to new tenants to secure a steady income flow”. 

Henderson believes softening rentals from extra CBD office space will lessen “the drift of key professional services away from the town centre”. 

Local rents may be easing generally but peak prices for top CBD sites are behind only those of Auckland and Wellington, according to a Colliers list that Henderson cites. 

Our semi-stratospheric prime rents may be partly attributable to another minor local phenomenon that Henderson highlights. 

Compared with New Zealand as a whole, retail sector growth in Queenstown-Lakes has been virtually unaffected by the black clouds of the past two years. 

In 2008 the number of “retail employers” jumped 4.8 per cent compared with just 0.7 per cent nationally, Henderson says. 

Even in 2009, when things really started to bite, retail growth locally numbered 1.6 per cent compared with 0.6 per cent nationwide. 

Worker tallies from last year are even more indicative. While the number of retail employees in Queenstown-Lakes fell less than one per cent, nationally the drop was 5.3 per cent. 

But Queenstown is a district of small retailers, Henderson’s report shows. 

Almost 50 per cent of retail businesses employ no more than five staff, compared with only 37 per cent of retailers nationally with the same small staffs. 

As well as conventional shops, “retail” encompasses restaurants, bars and clubs, accommodation, car dealers, petrol stations and vehicle repairers.