The Queenstown commercial market is extremely buoyant with high confidence in all sectors due to continued growth from tourism, and very strong activity in the building sector. With a number of tourism, commercial, retail and infrastructure projects being undertaken, combined with low interest rates and a growing population (expected to nearly double from 27,180 in the next 30 years) the Queenstown region is experiencing exceptional growth with approximately $320m of commercial and infrastructure projects underway in 2019 and $800m proposed in 2020.
Visitor spending in the Queenstown region was estimated at $2,343m to Y/E Feb 2019, an increase of 6.5%. Accommodation operators achieved an average occupancy of 68.7%, and an average daily rate of $249 for the Y/E March 2019.
A number of new hotels and apartment projects are currently proposed with currently 2,405 rooms consented and another 1700 in the consent process. In 2019 YTD Queenstown Airport recorded 2.3m passenger movements, a 10% growth on the previous year, and is forecasting 3.2m passenger movements by 2025.
CBD retail and office
CBD retail and office rents are in prime demand with retailers prepared to pay premium rents to secure a space in the CBD area. As a result of this the landscape in town is changing with a number of new food and beverage businesses opening and well-known retail operators moving into the CBD. A number of retailers and professional services have moved out to Frankton Flats into areas such as Terrace Junction, The Landing, Remarkables Park and more recently the Five Mile and Queenstown Central shopping and office precincts. These areas are offering brand new offices that are more accessible with plenty of parking, and situated close to a number of residential areas. The Frankton commercial market now offers approximately 76,000m2 of total retail space.
There is currently very little office space available in the CBD with vacant leases being taken up very quickly. Although rents have remained steady over the last two years we have seen a number of legal, accounting, and professional service companies move out to the Frankton area where there is good parking for staff and clients. The demand for office space in the Frankton area has been continually increasing with yields of between 5% and 6% being achieved by building owners.
A number of commercial developments are proposed or underway in the Queenstown area. These include:
- A multimillion-dollar redevelopment of O’Connell’s Mall in the CBD
- Construction underway of the Intercontinental Hotel and Ramada Queenstown Apartments near the CBD
- Major hotel developments proposed at Lakeview Holiday Park and near the Skyline Gondola
- Skyline Queenstown undertaking a multimillion-dollar refurbishment of its Queenstown tourism facility
- Significant development of the 46ha Remarkables Park development featuring hotels, tourism apartments, commercial units, and residential apartments and town houses
- Completion of the Queenstown Central development (in Frankton Flats) consisting of 10,000m2 of retail. Anchor tenant Kmart is already open and this precinct offers an additional 4500m2 of office space about to open
- Additional new buildings at the Five Mile precinct creating 4,050m2 of ground floor retail and food and beverage, and a proposed 70-room hotel
The shortage of industrial land for development has resulted in an extremely low vacancy rate. As a result of this any new land for sale is achieving sale prices over $1000psm. Some businesses in the industrial sector are relocating to Cromwell due to the availability of land with lower prices and geographically being in a better position to service not only Queenstown but Cromwell, Wanaka and Alexandra.