Sylvia Park decision will open up competition for Auckland tenants

By Campbell McIlroy

Friday 7th December 2001

To many this week's environment court decision on Sylvia Park was just the end of another protracted property dispute by commercial interests.

But the significance of the decision should not be overlooked.

In turning down Westfield's (as well as Two Double Five's, the Newmarket Business Association's, and Ngati Maru Iwi Authority's) application to stop Kiwi Income Property Trust from developing Sylvia Park, Judge David Sheppard loosened Westfield's grip on Auckland's retail market.

In the space of just a few years Auckland's shopping centre market has seen the arrival of AMP's Botany Town Centre, the expansion and refurbishment of its Lynnmall Shopping Centre and acquisition of the Manukau Supa Centa, the expansion of Two Double Seven in Newmarket, and now a virtual green light given to Kiwi's Sylvia Park project.

Before all this the only shopping centres in Auckland which weren't owned by Westfield were a smaller Lynnmall and Two Double Seven.

The result can only be a good one for Auckland on a number of levels.

The presence of more landlords in the retail market is good for the retailers as it opens up competition for the tenants. And, of course, it can only be good for consumers as it offers more choice, and creates competition for the discretionary dollar.

AMP's head of property Anthony Beverley said Westfield and St Lukes had had the field to themselves and that was changing.

Judge Sheppard's decision also struck a blow against competitive resource consent objections.

While his judgment did not slam Westfield and Two Double Five from objecting on competitive grounds, "Westfield's case was mainly directed to claimed adverse effects on communities served by existing shopping centres at Panmure, Otahuhu, and, (to a lesser extent) Pakuranga, the judge instead focused on the inadequacies of their arguments under the RMA.

Westfield's argument appeared, based on the judgment, to have been wanting.

Its case was also not helped by the narrow brief given to its expert witnesses.

"Mr Jebb agreed that he had not been commissioned to make his own specific analysis of the retail impacts of Sylvia Park centre, but to provide a critique of the SPBCL (Kiwi) evidence... Dr Taylor agreed that he had not assessed the positive effects of the new centre in terms of amenity... Dr Taylor agreed that he had not made his own assessment of the impact of the new centre on retail activity in existing centres, but had relied on the work of others... Dr Taylor acknowledged that he had not evaluated the extent or quality of the retail choice available in the Panmure centre... Mr Butcher agreed that he had not been asked to make an overall assessment of economic efficiency of the Sylvia Park project, and was not able to state whether in economic efficiency terms an overall assessment of the project would be positive or negative."

Judge Sheppard, while accepting there would be an initial 11-14% trade loss for Panmure and Otahuhu, said the losses would not be "nearly as great as alleged by the Westfield and Newmarket interests.

"We do not accept the claims that the sustainability of those centres would be destroyed, that their viability would be jeopardised, that their social functions would be significantly reduced..."

The question is what now?

Will Kiwi undertake a $500 million mixed-use development covering 21ha with 148,000sq m of retail, office and residential developments?

Despite its objection, Westfield constantly reminds us how undershopped the New Zealand market is in terms of retail spend in shopping centres.

Most commentators agree it's a great location with a lot going for it but Kiwi faces a number of challenges, not least of all finding large anchor tenants not already committed to Botany, Manukau, or large format developments in the area.

At least Kiwi got a little cash in the bank to kick things off. It has sold Cigna House in Wellington for $13 million to Zeta Investments. The deal was negotiated by CB Richard Ellis.

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