Tough sell: How Commercial Bay is faring almost a year on after opening

Retailers and hospitality operators in downtown Auckland’s new Commercial Bay shopping centre are facing a trading reality very different from what was originally pitched to them.

The $1 billion precinct has never known trading in a Covid-free world. While it was designed for a time when 2.7 million tourists a year visited the central city, it is now the America’s Cup regatta crowds and local workers that are credited with keeping businesses going.

Opened by Prime Minister Jacinda Ardern on June 11 last year, the three-level site is home to 120 retailers and was inspired by cities such as Melbourne and Zurich. Designed with cruise ship passengers and other tourists in mind, it is instead visited largely by Aucklanders and Kiwis on domestic holidays.

Half a million people visited Commercial Bay in its opening two weeks, and 2 million in its first two months of trading. Today, between 170,000-200,000 people visit the centre each week, says owner Precinct Properties.

Foot traffic in the Auckland CBD through January and February was down by about 46 per cent year-on-year, while transactions have fallen by between 29 and 44 per cent, according to figures from shopper insights and pedestrian tracking organisation Bellwether.

This week, however, foot traffic has been down by just 12 per cent on the same week in March last year, something that’s credited to a boost in visitors from the America’s Cup. (In this week last year, retail visits and spending data plunged abruptly as lockdown restrictions came into effect.)

After a booming opening and a strong Christmas trading period, it seems Commercial Bay is now trading at a fraction of its potential despite being home to big-name international retailers, some of them new to the New Zealand market, and some top-quality restaurants.

Luggage company Herschel Supply Co closed its store in the shopping centre late last month, following clothing company Ingrid Starnes, which did the same last year. Most recently, coffee brand Cali Press shut down, and has since been placed in liquidation.

Operators in the centre have told the Herald trading and foot traffic are “consistently unpredictable”, with store performance changing by the day, making it hard to make financial forecasts.

Some retailers, who spoke to the Herald on condition of anonymity, say they are struggling. The food hall on the upper level, however, is thriving, and is the main drawcard bringing people into the precinct.

One cafe worker says Commercial Bay has a lot of foot traffic in and out of the centre, particularly from workers in the adjoining PwC tower, which has helped operators. That, however, means business is limited to certain hours and depends on staff deciding to work in the office rather than from home.

“Honestly, it is so unpredictable in this place,” says the barista. “Even when we first opened, we tried figuring out from day one what the patterns would be like, but there hasn’t been a consistent pattern since opening last year.

“Post-lockdowns, it’s always a little bit busier because everyone is itching to get out of the house, but otherwise it is very unpredictable. There are days when it is really busy and days when it is not.”

The worker says the outlet does not always meet its weekly sales targets, but overall it trades reasonably well as most of its customers are PwC Tower office workers. Its busiest period is 8:30am to 10am, and things are much quieter on weekends.

“Without the office staff we wouldn’t be operating at all.”

Commercial Bay’s ground level almost always seems to be quiet, he says, in contrast to the regular flow of people walking through the upper levels.

Big-name retailers on the lower levels such as Tommy Hilfiger, Calvin Klein, Mecca Beauty and Scotch and Soda rarely appear to have more than a couple of people inside.


Adam Wright, retail assistant at men’s clothing retailer I Love Ugly, says the brand’s store “gets by”, but he had originally thought the Commercial Bay branch would have been a lot busier than it typically was.

“Coming from other retail before, it’s [much] slower than I’m used to. We’re not really getting the foot traffic that I thought we would, but we still make target and we still do OK – but I thought we would do really well, we just get by here,” Wright told the Herald last week.

“We have an online presence as well; it doesn’t affect us too much if the stores don’t have customers, but as a brand we do small collection [releases] so we want the hype of people coming in.”

Wright says consumer sentiment changed after the two most recent lockdowns in February and March, and he got the impression shoppers were hesitant to part with their money. “In general, when there is no lockdown and maybe it is a few weeks into level 2 and people are getting used to [being out and about] again, shoppers are quite happy to try things on. Today I’ve had maybe one customer that has tried something on.”

More people are actively using the Covid-19 tracer app before coming into store, and lockdown is having a greater impact on shopper confidence with every change in alert level, Wright says.

“It might be the same numbers of people that maybe come [in store] but they might not spend as much or the same amount of time in here. I think people are quite hesitant to be in a city centre as a whole … I can feel that with the vibe.

“Every single time we’ve gone into lockdown and come back [out] there’s an instant difference” in reduced visitor numbers. “We struggle after a lockdown for a couple of weeks.”

Wright says management has had to “try a lot harder” to bring customers into the Commercial Bay store compared with the brand’s flagship location in Newmarket.

High-end fashion retailer Wynn Hamlyn has been operating its only retail store in Commercial Bay since September. The once wholesale-only business moved into the centre when Ingrid Starnes shut up shop last year.

Founder and clothing designer Wynn Crawshaw says sales in the shop have been good, but it does not have a benchmark to compare its trade with.

“We’re not sure if a store in a different location or different sort of situation would be better or worse, but we’ve had massive growth in the direct-to-consumer area,” says Crawshaw.

Between 50 and 100 customers are visiting the Wynn Hamlyn store each day. But, like other retailers, Crawshaw says it is hard to know what day will result in strong trade.

“What we’ve found is that our biggest lesson in retail is about having new stock; constant updates and new deliveries. We’ve found when we have that and newness in the store, it goes really well, and it tapers off from there depending on how long since the last delivery. That’s the dominant trend for the store and it is hard to pick anything else outside of that.”

Crawshaw says that with Commercial Bay designed with international tourists in mind, when the border does finally open, trade can only get stronger.

“If we think [trade] is good now, I’m excited to see what it would be like with all of those opportunities that it is geared towards.”

Jessie Wong, founder of upmarket handbag brand Yu Mei, has a similar view. She says trade for her store has been strong despite Covid disruption, and the brand’s major customer base is domestic tourists in Auckland from other regions.

“I still feel like Commercial Bay has been a really great area for us to be in. It’s our top trading store,” says Wong. Yu Mei’s Commercial Bay shop is twice the size of its Wellington outlet.

Wong says the regatta had brought more people into the area and into the centre.

“The way I look at it is, it’s not ideal that Covid happened for anyone. It’s obviously been undesirable to open at that time but you’ve just got to make the best of it and figure out better ways to communicate with people to get them down there, and make it exciting and fun for the local market.”

Foot traffic and trade in the centre can only get better, she says. “It will definitely attract tourists when those borders do open again. I’m really looking forward to that.”

Wong, like Crawshaw, says Commercial Bay owner Precinct Properties has been an accommodating landlord through Covid, helping with rent relief, other financial help and wider support such as marketing.

NZX-listed Precinct disputes claims that the centre is struggling, but admits that the closed border and lockdowns are having varying impacts on its operators.

It says that in the nine months since it has been operating, it has provided “some level of support” to all its retailers. It would not disclose what percentage of retailers are still receiving financial support or rent relief.


Andrew Trounson, Precinct Properties’ retail manager for Commercial Bay, who was charged with finding the tenants for the centre, paints a rosy picture of trading conditions.

Commercial Bay opened on the first day of level 1 after the first lockdown last year. There was pent-up excitement for the opening after about a year of delays, and the opening turnout exceeded its expectations.

To date the centre has had more than 6.5 million visitors.

Trounson says regular foot traffic counts had been hard to gauge with the multiple changes in alert levels in Auckland, but on average between 170,000 and 200,000 people were visiting Commercial Bay weekly. “Given we’ve experienced a number of lockdowns where we haven’t been able to trade, we’re pretty pleased [with visitation] given the circumstances.

“The feedback from retailers and looking at sales is a really successful opening two-month period and then [after] the second lockdown in August was a bit of slow recovery coming out of that through the months of September, where we operated under alert level 2 for quite a while. October was a really good month, back to normal sales projections as we had anticipated. November was looking strong and then we had the CBD event that took place on a Friday, which impacted trade for the CBD, but then we cranked back up again for the December Christmas trading period.

“We haven’t had a lot of history to benchmark against, but the December figures for the centre were up 43 per cent on November and sales were up 27 per cent against the opening period,” says Trounson.

Since the first lockdown New Zealand has spent 147 days out of 356 under alert level 2, 3 or 4, equating to 41 per cent of the time. All things considered, Trounson says Precinct is “optimistic” about how Commercial Bay was performing.

Foot traffic through the centre in January was down 12 per cent on December, while the tail end of February and data this month show encouraging signs as a result of the America’s Cup, particularly on sailing days, he says.

“The lockdowns have definitely impacted our ability to get any consistency going. There’s no denying it has been a challenging year – we never thought we’d open a retail centre of this size amidst a global pandemic.

“The biggest thing we’ve realised is Covid has impacted everyone differently. Success is down to a multitude of factors, down to the strength of the brand, experience of the operator, the product offering, being able to adapt. All of those factors contribute to how customers respond to that offering. It is different for everyone, but we’re fortunate that the majority of our retailers have been able to trade through.”

Trounson says Commercial Bay’s food hall, Harbour Eats, drives daily visits to the centre.

Although there has been reduced foot traffic through the centre, he says Precinct has noticed the average spend per transaction has increased. “People are shopping more purposefully and there is less browsing; that’s the feedback we’re getting from retailers.”

Precinct says it approaches leasing with its operators as “a partnership” – a shared risk and reward model – and says it has been proactive in supporting tenants through a variety of initiatives, including financial assistance, marketing and promotional activity.

“We treat it as a partnership; we’re in this together. We’re in challenging conditions for the short term, but for the long term, which is what Commercial Bay was built for, we’re still really optimistic and confident that the potential for the centre is yet to be realised.”

But is Commercial Bay making money? Has Precinct regained any of the nine figure investment spent to set up the site? Those are questions the Herald has been unable to answer. However, many signs point south at this stage.

Retail commentator Chris Wilkinson says there is no doubt that flexible working arrangements have also affected trade at Commercial Bay.

The businesses that are finding it tough in the centre are likely to be the ones that are there for “window dressing” purposes rather than bringing in serious sales, he says.

Wilkinson says most of Commercial Bay’s revenue at present would be coming from its big spending office block tenants, including the likes of video game developer RocketWerkz, and those tenants’ spending on site.

“In that centre, food is the anchor, not retail. Food is what is bringing people through on a regular and habitual basis, across all the audiences, whereas the apparel and [other discretionary retailers] may not have that wider appeal.”

He believes the centre has achieved what it set out to do, even with just a portion of its target market able to visit.

“Considering what’s happened in the last 12 months, I think they have done an incredibly good job, and yes, there’s likely to be a few casualties [ahead], we’ll probably see some stores come out and others go in, but that is really the way of retail going forward.”

International tourists aside, Commercial Bay has been affected by workers’ changing attitudes towards long term flexi-working, says Auckland Unlimited chief executive Nick Hill.

He says the impact on the centre was “very sad” and tough for operators.

“Anecdotally, I think the retail has found it harder than the hospitality, but all of it has suffered because of the timing of its opening with the emergence of Covid.”

Major construction and road works around downtown Auckland have also played a part. But in time those upgrades would result in greater pedestrian traffic, particularly when the City Rail Link is completed, says Hill.

He says Commercial Bay is a “destination in itself” within Auckland, and with time will bring increased trade to surrounding businesses outside the centre.

Impacts of ongoing road works

Work on the City Rail Link in the Auckland CBD has been ongoing for the best part of four years. There have also been serious works underway on Quay St and lower Albert St, and development of the civic square between the Britomart train station and Commercial Bay.

Viv Beck, chief executive of Heart of the City, says from mid-April and May, fewer road cones will become noticeable and restrictions caused by construction will start to peel away, which will benefit both Commercial Bay and other businesses in the area.

The front entrance of Britomart station, opening out to Te Komititanga, the new lower Queen St space, reopens next month. Quay St works are also due to be finished in April and construction on Tyler and Galway Streets will be complete mid-year.

While the city has been undergoing a significant period of disruption and transformation, it will come out the other side as a more desirable place, says Beck.

“When people are able to get off a ferry without all of those cones in the next month or two, come in by bus or train, valet park at Britomart or Commercial Bay at downtown, that will start to change the experience significantly.”

She says the outlook for retailing in the city centre is positive, even if there are a few more storms to weather along the way as a result of Covid and ongoing construction.

“The prognosis for the longer term is great. We’ve got investment like [Commercial Bay], there’s ongoing investment now which is a sign of confidence in the future – both public and private sector, even things like the filming of the America’s Cup flying around the world. We’ll be a pretty attractive place when those borders open.

“The investment will deliver great returns.”

Auckland contributes $100 billion to New Zealand’s GDP each year, and the city centre accounts for approximately 20 per cent of that, according to Auckland Unlimited.

The Lion King stage show, to be held at Spark arena in June, is expected to add $4 million to GDP and provide a significant boost to trade in the city centre.

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