December 2023 quarter: A shift in the right direction
So, what did the last 12 months look like for the city centre, and what happened in the last quarter?
When looking at the year-end to December 2023, there are positive trends to report. There’s been more spending - up 13% on 2022 - and more people - up 32% on 2022.
GDP growth in the city centre has also outpaced the rest of New Zealand, growing +9% (to the year ending March 2023). Commercial leasing continues to be positive, with more businesses locating here (overall business numbers grew by +1% to 15,201).
It was a mixed bag for the December quarter itself, with still a way to go, particularly with foot traffic.
Delve deeper into the most up-to-date data below.
City centre spend performs well against competition
Overall spend for the December 2023 quarter reached 92% of the December 2019 quarter, with the year-end December 2023 returning 90% (CPI adjusted) of the year-end December 2019. Spending across the last three quarters of the year has remained consistent when compared to the equivalent quarters in 2019 - hovering between 91-92%.
Marketview. Not for Reproduction.
When looking at how 2023 compared to 2022, there has been positive year on year growth of +13%. This is particularly promising when looking at how the overall national consumer spending performed for the same period - which reported only a +4% growth.
Source: Marketview. Not for Reproduction. * indicates CPI adjusted.
There is no doubt that the high cost of living and other macro-economic forces saw overall consumer spending down across New Zealand, particularly during the December quarter. Notwithstanding this, the city centre performed well against our regional and national competition, with overall spend down less overall and the number of transactions up.
Welcoming the world: Internationals flock to Auckland, spending jumps during December quarter
Marketview. Not for Reproduction.
111% growth of international visitor numbers to Auckland to the year ending December 2023, plus a cruise ship season with a 50% increase in port visits than the previous year, played a role in the great year-on-year growth in spend from internationals for the December quarter. (+22% compared to the December 2022 quarter). Most categories benefited from their presence, with Food Retailing, Health and Beauty and Hospitality noticing the biggest shifts.
Marketview. Not for Reproduction.
With expected continued growth in tourism numbers, accommodation forward bookings are higher for the period from February 2024 to January 2025 in comparison to last year. Occupancy on the books is also set to hit over 92% on Friday 8th March 2024, when P!NK will be performing at Eden Park.
Source: STR as of date. Not for reproduction
Foot traffic continued to track upwards
HOTC Pedestrian Counts. Not for Reproduction.
Foot traffic continued to track upwards during 2023, with an overall +32% increase on 2022. The figures for the December quarter grew +18% on the December 2022 quarter and reached 78% of the December 2019 quarter.
HOTC Pedestrian Counts. Not for Reproduction.
Overall, Fridays are the busiest time to be in the city centre
What were the busiest days (6 am - 6 pm)?
Throughout the year, Tuesday and Thursday have been the busiest days for pedestrians, each generating 16% of weekly foot traffic. They were behind by Wednesday and Friday, which each generated 15%. Despite the rise in the number of tourists and cruise ship passengers through the course of the December quarter, there’s been no shift to what days of the week are busiest.
This shows that people are here consistently throughout the week.
These insights are consistent with more people being back in the office, a trend reported in a recent JLL survey.
Head of Research, Gavin Read told us that:
“[our survey showed] 70% of people wanted to be back in the office between three to five days a week, with 23% wanted to be in the office five days a week to be with people.”
Events also played an important role in attracting people into the city centre during the day.
Christmas activations attracting crowds to Queen Street.
What were the busiest nights (6 pm - 6 am)?
Throughout the year, Saturday night was the busiest night for pedestrians, generating 22% of all foot traffic across the week followed by Friday night (20%) and the popular “student night” Wednesday at 14%. As we shifted into the festive season and summer gigs, the December quarter saw a slight shift in the data, with Saturdays remaining the busiest night of the week at 20% and Fridays at 19%. But then we saw Thursday’s making an appearance as the third busiest night of the quarter at 14%. Night-time foot traffic was helped throughout the December quarter as music fans flocked to gigs like The War on Drugs and Royal Blood, and people enjoyed our Late Night Art event and new events like the Midtown Festival.
HOTC Pedestrian Counts. Not for Reproduction.
A surge in GDP reconfirms the city centre as an economic powerhouse
The city centre has always made a significant contribution to the national GDP. The most recently updated Infometrics data shows that it accounted for 8% of the national GDP in 2023. For the second year in a row, Auckland’s city centre beat New Zealand’s economic growth, with the GDP for the year ending March 2023 up 9% from a year earlier.
Key metrics of worker numbers ( 157,530, +7%), business numbers ( 15,201, +1%) and residential numbers (38,470, +6%) showed across-the-board growth which meant more people, which is good news!
Some notable optimistic outlooks
A recent purchase of the iconic Hotel De Brett’s building saw the new owners excited about the opportunity for the city centre. One of the new owners, Chris Davies, Director of Location Group shared an enthusiasm for the growth in people and activity in the area. In a New Zealand Herald article, he mentioned that:
“Cruise ships and more people returning to work in offices in the area had created a buzz around the property which enhanced trade within it…it’s a great value-add opportunity...”
The opportunity for more people living in the city centre also gained some positive media attention which shone a light on the 51 Albert Street development and the hopeful sale of the penthouse apartment. It also reiterated some of the positive commercial and retail leasing metrics that we discuss in more detail below.
What’s happening with leasing?
JLL Quarterly Market Snapshots Dec. 2023. (Retail and Office).
JLL has released their latest leasing insights for the city centre. Head of Research Gavin Read says of the current landscape:
“The year seems to have started with plenty of vibrancy and colour, superbly supported by the sun providing long hot days. There have been plenty of cruise ships in port, and activity seems to be increasing with employees back to the office.”
Looking back to the December 2023 quarter, Gavin notes:
“The city centre’s net prime rents are up 4% [for the quarter], and up 10% for the calendar year. The city has seen some new occupiers, however, for the quarter, retail vacancies are unchanged at 7%, slightly down from the start of the year’s 8%.”
Retail Vacancy and Occupied Space - JLL New Zealand Market Snapshots Retail Q4 2023
JLL wrote in their Retail Quarterly Market Snapshot for the December 2023 quarter that they're "still seeing high demand for prime luxury retail locations in the city centre." This has been a consistent trend throughout the year.
The Snapshot used the leasing of 60 - 62 and 30 Queen Street to luxury brands, the expansion of I Love Ugly, the opening of Moochi in Commercial Bay and the opening of Christian Louboutin on Queen Street to illustrate this demand. It also touched on the increasing amount of retail activity in the lower city centre, exemplified by the corner site on 1 Albert Street being leased to Remarkable Gifts.
Christian Louboutin, Queen Street
Gavin says of office leasing:
“Office like Retail has had a positive 2023, with prime net rents up 8% annually, while premiere vacancy has remained extremely low at 1.6%, confirming the high demand for quality office space from occupiers.”
Office Vacancy and Occupied Space - JLL New Zealand Market Snapshots Office Q4 2023
JLL's Office Market Snapshot for the December 2023 quarter looks ahead to the six office buildings in various levels of completion. Once finished, "they are expected to add ~106,000sqm by 2026....[and] expected to attract tenants from the lower end of prime and upper end of secondary properties, as more and more organisations compete to secure prime offices, especially as most of these developments are pre-committed."
New businesses open during the quarter
The month of December was particularly busy for new businesses in the hospitality sector here – and they’re already getting rave reviews.
The newest hidden bar and restaurant in the city centre The Nightcar was described by The Urban List as “basically the answer to an Aucklander’s prayers: generous late-night opening hours, stackable portions, exquisite Chinese cuisine, a champagne trolley, and a wine and cocktail list as meticulously crafted as its sleek interior.”
Darling on Drake Street features a massive rooftop opening in the historic Victoria Park Market. It also found a fan in Jesse Mulligan, who wrote in the New Zealand Herald that it has “one of the best chefs in New Zealand”.
2024 also started with a bang, with the opening of Intercontinental Auckland, the newest five-star luxury hotel for the city at Precinct Property’s One Queen Street. The Intercontinental is also home to Advieh, a contemporary Turkish restaurant headed by Chef Gareth Stewart. He’ll be a recognisable name to foodies who frequent the city centre, having also worked at beloved restaurants Soul Bar and Bistro and Euro. Advieh has already found a fan in Business Desk’s Brent Melville, who prefixes his review with “take our advice and book now.” Enough said!
A summary of our insights for the December 2023 quarter is available here.
Previous quarterly results are available here.
