Restaurants, cafes and food outlets in Auckland’s new $1 billion Commercial Bay recorded a $2.8 million loss in the latest year when they opened two months after New Zealand’s highest Covid alert level four.
But pedestrian numbers recovered lately to more than 1m people a month, showing how retail recession can become retail recovery.
Commercial Bay opened last June and even though New Zealand was back at Covid alert level 1 by then, thousands of CBD office workers stayed home, far from the new building with 120 retail outlets.
“Commercial Bay hospitality achieved successful openings, however the impact of lockdowns led to $2.8m loss for the year,” landlord Precinct Properties NZ said last week in its June 30, 2021 aannual result where its portfolio was valued up by $282.9 million, helping push up net profit by 411 per cent.
Last year’s $35.1m net profit rose to $179.9 m, with the unrealised valuation gains significantly boosting the bottom line.
Foot traffic numbers clearly showed the downturn when cruise ships no longer docked at the port, meaning the waterfront eateries have never enjoyed what was once expected to be a robust trade from those visitors.
Around 2.7m tourists once visited Auckland’s CBD annually but last year, the bars, shops and restaurants in the upmarket open-air style mall mimicking internal streets and built by Fletcher Construction were not filled with as many people as expected.
The eftpos machines weren’t beeping, clothes, shoes and makeup weren’t being sold and diners had their pick of seats.
Precinct leases big new areas like the dark and moody foodhall Harbour Eats where furniture was built-offsite, flatened and trucked into the city. Luxury restaurants Saxon + Parole (named after two American race horses) and Ben Bayly’s Ahi (fire in te reo Māori) are major additions to Auckland’s rich dining landscape.
From the new Precinct information, we know what really happened and it’s a tale of retail recovery as much as recession.
The annual result’s investor presentation showed how visitor numbers dropped from around 1m a month at the opening in June to only around 300,000 people a month by last August.
From there, numbers have climbed gradually, only dented by the February and March this year with covid alert level rising.
But by July, more than 1m people visited Commercial Bay’s retail outlets, Precinct’s chart showed.
Last year, fashion house Ingrid Starnes closed in the centre, In February, luggage retailer Herschel Supply Co shut along with coffee brand Cali Press.
Now, things are looking up.
Precinct’s investor presentation with its annual result last week showed how when workers were not at their desks in the city last year, its tenants who operate food and beverage businesses had suffered.
“The centre has shown strategic resilience in its first year of operation considering the context of a global pandemic. Foot traffic has built strongly through 2021 to date and is translating to sales growth,” the presentation said.
Asked to clarify the number, Pritchard said: “The Commercial Bay hospitality loss relates to Precinct owned venues at Commercial Bay. This is the impact of lockdowns during the year.”
Precinct said the centre “has shown strategic resilience in its first year of operation considering the context of a global pandemic”.
Foot traffic had built throughout this year and was translating into sales growth, it said.
Multi-outlet food hall Harbour Eats has particularly successful area, with Precinct referring to that in a slide on strongest performers.
Last month’s foot traffic was the highest since last June’s opening, up 42 per cent on April this year, Precinct said.
Chief executive Scott Pritchard praised Auckland Council changes in the area, particularly the opening of Te Komititanga and Te Wānanga.
Te Komititanga was previously called Queen Elizabeth Square between Quay St and Customs St.
Controversially, Precinct bought some of that square in 2015 to expand Commercial Bay’s footprint.Auckland Council agreed to sell part of the square to Precinct for $27.2m.
A plan change to rezone the 1892sq m area outside what used to be the Downtown Shopping Centre, from public open space to provide development potential, was passed in 2015.
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