Lucky Australian won leasing job at new-era retail centre
He’s come from a wider role, as leasing manager – projects for AMP Shopping Centres Pty Ltd, headquartered in Sydney, after switching from major competitor Westfield.
Staff at AMP’s Australian shopping centre company were green with envy that New Zealand should be getting such a different greenfields project. Investment managers were equally green. They all wanted a share of this pie. Mr Hutchings was one who did.
AMP investment divisions could have funded the $180 million project several times over, yet this is a project which breaks all the rules of New Zealand property development.
It offers space
It offers space. It offers a park bench to the weary shopper. It offers specialty shops in a covered, but much wider than usual, mall. And it takes that shopper into the open air, for a stroll instead of a forced march, through a town square which is likely to become a feature spot for community events, and back under more covered space.
Mostly, it offers space. Take a look at any New Zealand development (bar a couple), and you’ll find that’s something the country’s proponents of maximum floor area ratio use don’t allow for.
Going into winter, of course, the covered malls fill up with people when it rains. We can be tourists in these shopping palaces, or we can be shoppers. Parts of Botany will have more downtime because the elements will keep shoppers away, but I’m picking the generally more agreeable and less pressurised environment will win popularity.
AMP confident of meeting investment targets
AMP is confident of meeting its investment targets, which basically comes down to a return of at least 11%, meaning rental income of around $16 million from the 131 specialty shops, anchors and bulk retail outlets. Already, in an era of downward annual property valuations, Botany has risen in the AMP books from $180 million to $185 million.
Anthony Beverley, AMP’s head of property in New Zealand, described the two-year project of creating the shopping centre, on 17.6ha at the junction of Ti Rakau Drive and the new Te Irirangi Drive, as “turning that [site] into the epicentre of the east.”
It is in the middle of Manukau Central and Pakuranga, where competitor Westfield has Shoppingtowns, and Howick, where the retailing is all smallscale. It’s not so far from Mt Wellington, where Kiwi Income Property Trust (read Lend Lease) will create the Sylvia Park town centre despite the stonewalling opposition in the planning process of every trade creditor, and also near the Waiouru Peninsula, where McConnell International is creating a new business park and which will introduce a new Southern Motorway interchange and consequent change in traffic flow more directly to Botany.
Those factors create great returns if you do everything right, kill your project if you do it wrong. Day 1 for Botany’s specialty shops was Thursday 3 May, when the sun came out after heavy rain. There were bands and balloons and some festivity, AMP Henderson Global Investors held a function to celebrate the handover from head contractor Mainzeal Construction, a crew from Westfield cast a close eye over the site and were complimentary about it, and there were plain ordinary shoppers, not overly impeded by festivity participants.
Open style a contrast with traditional dumbbell
Said Mr Beverley: “The feedback from our competitors has been extraordinary. If I were our competitor, I’d be quite concerned about what this means for the future in New Zealand.” What he’s talking about is the open indoor/outdoor style, compared to the standard Westfield mall form of a dumbbell shape, where the shopping is all indoors and there’s less chance for the shoppers’ attention to stray from their primary function of spending as much as possible.
Botany is at the centre of a serious Australian retail war. The AMP project puts pressure on Westfield, whose Manukau City Centre (50:50 ownership with National Mutual/Axa and on leasehold land) is tired and which, on the other side, has started the process of redeveloping Pakuranga Plaza with a controversial bid to take over council carparks and streets, which would enable it to create a fully enclosed environment.
Lend Lease has 50% of the management of Kiwi Income and is in position to take full control of the trust. This Australian has come and gone in New Zealand, previously being a partner with Fletcher Challenge in the St Lukes shopping centre, which became flagship of the St Lukes group, subsequently acquired by Westfield.
Sylvia Park offers Lend Lease the opportunity — as a developer, an investor and a business in which it could invite New Zealanders to become keener investors — to make a statement.
Two of these shopping centres, Botany and Sylvia Park, are new and all will be bigger and better than predecessors in the south and east of Auckland. In all three ownership cases — AMP, Westfield and Lend Lease — failure at the hands of either of the others in the battles for market share and investment return is not a pretty option.
Botany has been a quick project, for three reasons. It’s on a greenfields site amid greenfields developments, it had council support and it was well thought through before work started.
AMP Asset Management (as AMP Henderson Global Investors was then) entered a conditional contract on the 17.6ha site in July 1998 and secured major retailers and some specialty tenants before going unconditional in October 1999, when construction began.
The first development stage was the large format retail, 13 stores in 12,800mÂ² backing on to the existing Pak N’ Save and Warehouse area along Ti Rakau Drive.
The new town centre development opened this week contains a 7500mÂ² Farmers, 3500mÂ² New World supermarket, and 131 specialty stores in 20,000mÂ². There is also 5500mÂ² of upstairs office space and 1600mÂ² of terraces for a total 50,900mÂ² of new retail space. Resource consent has been granted for 4000mÂ² of expansion.
Ninety of the 131 specialty stores opened this week, 10 will open over the next fortnight and 13 in the fortnight after that. They should all be open by July. Only five spaces remain untenanted, of which two are in final negotiation.
High St shops drawn to different mall style
One important factor in the retail makeup is that High St shops, some well recognised as being reluctant to enter malls, have taken up space. Why? “We’ve identified the demographic that supports their business,” Mr Hutchings said.
Some of the clothing retailers which have preferred High St sites see malls as “drawing a certain kind of customer who’s not theirs,” Mr Hutchings said.
Botany, however, was very different from the existing Pakuranga and Manukau.
One retailer whose store opening will be more of a special occasion than most is David Lewis, who has lost the Esprit label on his 23 stores after 22 years holding the franchise. He will unveil the new label for his chain at Botany, where he has a prime entry site in the upmarket, covered fashion mall.
Fresh look for Glassons
Another well known brand, Glassons, has unveiled a new style of store, with clear sight lines through big uncluttered windows from the mall to the rear wall of the store. Its first store in this style is in the recently opened Fountaingate shopping centre in Melbourne, and a similar but smaller version is at Westfield’s Glenfield.
Glasson’s other brand, Hallenstein’s, normally has outlets of 180-200mÂ², but at Botany it’s gone big, opening a 400mÂ² store, including the HBK kids’ label. The average store at Botany is just over 100mÂ², on the large side for a mall.
Among the newcomers is a local with a big name, Platinum, owned by Marty England (at right in picture, with Lawrence Hutchings) and his sister, Mary. Their Victoria Park Market store sells more Nike gear than any other New Zealand outlet, supported by the proximity of the Les Mills World of Fitness, and their second store is on Newmarket Broadway.
“If this trades as well as those I’ll be very happy. But we should do better,” Mr England said.
Botany has attracted EstÃ©e Lauder’s Origins, which Smith & Caughey has inhouse but which otherwise is found in duty free areas. “This is the first free-standing Origins in Australia or New Zealand,” Mr Hutchings said.
Another newcomer is Jigsaw, which is in only one other shopping centre, Shore City Galleria. “We’re debuting another three fashion stores in July — Bendon are only High St, and Mellencamp Bags are only a High St operation [though they also appear DressSmart in Onehunga].”
Amazon, with seven stores in Auckland, has opened its largest premises at Botany, where it has 400mÂ² with dual access from the fashion mall and a parking area.
Mr Hutchings said rent for the specialties was “on a par with High St, a little lower than Newmarket on average. We’ve tried not to be overtly lofty. The concept stores will do well, but they won’t generate the income some of the majors will.”