3. Future Growth Demand Issues - Home | Future Proof - Knowing our

Waikato Regional Retail Study/ pg 92 of 185

Speer & Starr Consulting March 2009

3. Future Growth Demand Issues There are four key issues that will drive future retail growth demand, and these are investigated as follows:

1. Population Growth 2. “Dairying is the Waikato” – a key local economic factor 3. Hamilton is the Employment Hub for the Region 4. “Real” Income and Retail Sales Growth Factor

1. Population Growth The Waikato Region is a major growth sector within New Zealand. Across the study area, growth over the past ten years has been: 1996 / 2001 2001 / 2006 • Hamilton City + 6,471 / +5.9% +13,000 /+11.1% • Waikato District + 717 / +1.8% + 4,100 /+10.3% • Waipa District + 1,464 / + 3.9% + 3,530 /+ 9.1% • Morrinsville Area + 261 / + 3.1% + 435 /+ 4.7% + 8,913 +21,065 /+10.0% VS • Auckland Region + 90,000 / +8.4% +145,000 / +12.4% • National Growth +118,900 / +3.3% +296,150 / + 7.8% Obviously, growth in Hamilton City is the dominant driver to growth in the Region, where growth rates are more akin to the strong Auckland experience. Population growth is significant to retail growth. More people require more food and clothing and other personal goods and services; more households require more appliances and hardware and furniture, etc. Following is a discussion about potential growth in the Study Region, including identification of where the strongest growth sectors are. We have adopted future population projections as prepared by University of Waikato – Population Studies Department, October 2008, for all sectors of the Region. (a) Hamilton City growth In short, it would be fair to describe the future population growth expectations for Hamilton City as strong, in keeping with strong growth that has actually occurred over the past several years. For example, during the 2001 – 2006 period, Hamilton growth levels were quite strong compared to other areas around New Zealand. At over 11% growth over this 5-year period – over 2% per annum, this is a significant growth rate for Hamilton City. Importantly, a steady level of strong growth is expected to continue. This has significant implications for providing new retail activities that can meet this growth demand.



Relative to other major urban centres around the country, the Hamilton growth experience is more comparable to the experience of a major growth area like Auckland, as illustrated in the following table.

Recent Population Growth Experience

Population Growth @ 2006 2001 – 2006 Manukau City 330,000 +46,600 / +16.4% Auckland City 420,000 +40,000 / +10.5% Christchurch City 360,000 +26,700 / + 8.3% North Shore City 207,000 +22,300 / +12.1% Wellington City 183,500 +16,300 / + 9.7% Waitakere City 184,000 +15,000 / + 8.9% HAMILTON CITY 134,400 +13,000 / +11.1% Tauranga District 105,000 +12,900 / +14.0% Rodney District 90,000 +12,300 / +14.0% Nelson/Tasman 93,000 + 4,500 / + 5.1% Dunedin 122,000 + 4,200 / + 3.5% Hastings 72,000 + 3,600 / + 5.3% Kapiti District 46,000 + 3,500 / + 8.2% Palmerston North 76,000 + 2,700 / + 3.7% New Plymouth 69,000 + 2,500 / + 3.7% Napier 57,000 + 2,000 / + 3.6% Lower Hutt City 97,000 + 1,700 / + 1.8% NATIONALLY 4,116,000 +296,150 / + 7.8% A key question is : how much growth can be expected in the future? According to work undertaken by University of Waikato – Population Studies Department (October 2008), and adopting the “medium projection plus EDA [economic development initiatives]”, a 20-year growth expectation for the City is as follows : Population Household Average Growth Growth Persons/dwelling • Base at 2006 134,400 47,550 2.83 • 2006 – 2011 : +12,200 +3,620 3.37 • 2011 – 2016 : +13,000 +4,540 2.86 • 2016 – 2021 : +13,800 +5,290 2.61 • 2021 – 2026 : +12,500 +5,490 2.27 Total Growth : +51,500 +18,940 av.2.72 . . . over 20 yrs . . . Gross Average: +2,575 p.a. + 947 p.a. Total at 2026 : 185,900 66,490



Broadly, growth in the next 20-year period to 2026 is anticipated to be similar to recent experiences, particularly based on continuing strong immigration. However, immigration is a highly variation factor and can experience “extreme” movement over relatively short periods. The following chart demonstrates the recent NZ experience vs. some other western countries.

The New Zealand Herald 23/03/06\

Clearly, the NZ experience has a high degree of variableness. This is shown more specifically in the following chart, which illustrates the net migration experience for New Zealand annually over a 27-year period 1980-2007.

Net Migration to New Zealand

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The NZ migration experience has “bounced” from positive growth to negative growth several times over this timeframe, with the current experience as at March 2008 nearing “zero” once again. Arrivals in absolute numbers are currently high, nearby double the level of the 1980’s, but departures are also very high, leading to little net gain. The Trans-Tasman movement of labour to/from Australia is the main driver of such variation. Currently, the Australian economy is performing well in international terms; employment is tight, thus wage rates are high. The same scenario broadly applies to NZ currently, but the Australian wage rate is much higher than NZ wages. Hence, the labour attraction to Australia is strong and the current outflow of “Kiwis” reflect this. Accordingly, Hamilton growth in the near future might not achieve the actual levels of growth forecast. But given the wide variableness to immigration, over a 20-year period the total suggested city growth levels are reasonable guidelines to assist other planning work, such as retail demand. A follow-on question to how much growth is expected is : where is growth likely to occur ? For example, during the 5-year period 1996-2001: - growth of +6,500 was experienced across the city, of which . . . - over 60% of city growth occurred in the northeast at Rototuna (+4,000) - and another 30% occurred in the general Western Suburbs (+2,000) . . . while between 2001-2006 . . . - growth of +13,000 was experienced across the city, of which . . . - about 45% of city growth occurred in the northeast at Rototuna (+6,000) - with the rest of growth primarily focused in: • 15% in the general Western Suburbs (+2,000) • 15% in the southeast suburbs around University/Hillcrest (+2000) • 10% in the central city suburbs (+1,300) • 15% scattered elsewhere around the city Obviously, the northeast / Rototuna area has been a very significant growth sector, accounting for at least half of all city growth. Over the last 10-year period, total city growth of almost +20,000 occurred (a gross average of 2,000/p.a.), of which 10,500 occurred in the northeast of Rototuna. Into the future, the next 20-year period has projected growth similar to or slightly greater than the growth experience over the past 5 years – around +2,500 p.a. And, where this will occur is defined by the City’s growth strategy: • New Growth cells at the City fringe: • continuation of growth in the northeast, at Rototuna, = +15,100 • opening a new growth cell in the northwest, at Rotokauri, stage 1 = + 4,350 • opening a new growth cell in the southwest, at Peacocke,stage1 = + 5,700 25,150 • Growth through infill development elsewhere around the City 26,350 Total = +51,500



Also noteworthy about Hamilton City’s future growth are some distinctive demographic features. (i) A noteworthy trend associated with migration is that while net migration gains are very low currently, we are replacing a large number of New Zealanders with non-New Zealanders. This is showing up in the City’s demographic profile, as it is in most other urban areas of the country. (ii) Also noteworthy is the declining trend in the average size of households – a feature that is in keeping with current “western world” trends. This is a combination of an aging society, and families with fewer children. (iii) Most notable about Hamilton, today it has a youthful population, and in 20 years it will be “more mature” but still a youthful population. • Today, 48% (almost half) under 30 years of age vs. 42% national average . . . and with only 9.2% over 65 years vs.12.3% national average . . . the most notable differences are found in the 15 – 30 year age group: . . . 26.4% in Hamilton vs. 20.2% national average . . . this youthful age-structure is strongly influenced by 3 x major tertiary education institutions found in the City with a student body of over 40,000, plus a usual rural-to-city migration of younger people in search of jobs. • So, today the Hamilton experience is very different from the national average.

Statistics NZ, national projections



• While over the next +20 years . . . this position is expected to change towards a more mature population base as time goes by, reflecting dominant population trends around the Western World for an aging society eg. by 2026 . . . Children 0-14 years will grow, } both groups will grow by . . . and . . . } around +20% increase . . . Young Adults 15 – 39yrs will also grow } in actual numbers . . . but Middle Aged Adults will increase by +30% in actual numbers . . . and Older People 65+years will increase +69% in actual numbers, representing 12.4% of the City population ( a large increase from today, but still below the expected national average at close to 20%) • BUT the overall picture is still a “youthful Hamilton”, with the City projected to be the third-youngest TA at 2031.

Statistics NZ, national projections



Overall, future growth for Hamilton city has these key elements: • Growth is projected to continue broadly at levels similar to or slightly greater than the growth experience over the past 5 years, around +2,500 p.a., but with obvious yearly fluctuations; • Over the next 20-years, growth is projected at +51,500 people : +38% increase over current levels; • A youthful population age structure will still prevail in 20 years; • Where this new growth will occur is broadly a 50/50 split between : -- growth occurring in the new growth cells of Rototouna, Rotokauri and Peacockes; -- targeted infill development within the urban area … Overall, providing a reasonably balanced distribution in growth across many sectors of the City as compared to recent growth which has strongly emphasised the northern fringe to the City. Refer MAP 13, following, for identification of key growth sectors around the City.



MAP 13



Also noteworthy about Hamilton City’s future growth are some distinctive demographic features. (i) A noteworthy trend associated with migration is that while net migration gains are very low currently, we are replacing a large number of New Zealanders with non-New Zealanders. This is showing up in the City’s demographic profile, as it is in most other urban areas of the country. (ii) Also noteworthy is the declining trend in the average size of households – a feature that is in keeping with current “western world” trends. This is a combination of an aging society, and families with fewer children. (iii) Most notable about Hamilton, today it has a youthful population, and in 20 years it will be “more mature” but still a youthful population. • Today, 48% (almost half) under 30 years of age vs. 42% national average . . . and with only 9.2% over 65 years vs.12.3% national average . . . the most notable differences are found in the 15 – 30 year age group: . . . 26.4% in Hamilton vs. 20.2% national average . . . this youthful age-structure is strongly influenced by 3 x major tertiary education institutions found in the City with a student body of over 40,000 . . . plus a usual rural-to-city migration of younger people searching for job opportunities. • BUT . . . this position is expected to change towards a more mature population base as time goes by, more closely reflecting dominant population trends around the Western World for an aging society eg. by 2026 . . . Children 0-14 years will grow, } both groups will grow by . . . and . . . } around +20% increase . . . Young Adults 15 – 39yrs will also grow } in actual numbers . . . but Middle Aged Adults will increase by +30% in actual numbers . . . and Older People 65+years will increase +69% in actual numbers, representing 12.4% of the City population ( a large increase from today, but still below the expected national average at close to 20%)



(b) Waikato District Growth Recent growth through Waikato District has emphasised those areas closest to Hamilton City, particularly in areas along the western and eastern sides of the City. For example: Population Growth @ 2006 2001-2006 • North Rural / TeKauwhata 4,530 + 378 (TeKauwhata,Waerenga, Maramarua, Meremere) • West Rural / Raglan 5,415 + 192 (Raglan, Te Uku, Te Akau) • East Rural / Whitikahu 2,110 + 66 • City fringe west 8,325 +1,182 (Western Hills, Horotiu, TeKowhai, Whatawhata) • City fringe east 6,035 + 822 (Taupiri, Eureka, Gordonton, Kaunui) • Southeast / Tamahere 6,585 +1,281 (Matangi, Tamahere) • Ngaruawahia township 5,300 + 168 • Huntly township 7,100 + 12 45,400 +4,101 +10.3% Clearly, the City Fringe West, City Fringe East, and the Southeast Sectors are the most important growth areas for the District, accounting for around 80% of all growth. Yet, at the moment these areas also account for only around 45% of the existing District population. So, the growth bias in areas nearby to Hamilton City is strong. But what about into the future – how much growth can be expected, and where? District population growth is strongly influenced by the Hamilton job market, given that 32% of the District’s working population fills jobs located in Hamilton City. Assuming that the Hamilton job market remains strong, then future growth expectations around the District are for similar growth trends and in similar areas. The University of Waikato – Population Studies Department, has also undertaken population projections for Waikato District. Revised work completed during October 2008 identified a growth scenario as follows (eg. using medium projection, plus EDA-“economic development initiatives”) : Population Household Average Growth Growth Persons/dwelling • Base at 2006 45,400 15,420 2.94 • 2006 – 2011 : +3,750 +1,465 2.56 • 2011 – 2016 : +4,250 +1,710 2.49 • 2016 – 2021 : +5,500 +2,075 2.65 • 2021 – 2026 : +4,650 +1,800 2.58 Total : +18,150 +7,050 av.2.57 . . . over 20 yrs . . . Gross Average: +907p.a. +352 p.a. Broadly, growth expectations are for a continuation, if not an increase, in the recent strong growth levels experienced over the past 5-years 2001-2006.



Where growth is likely to occur is a key question. Growth around the fringes of the City continue to be favoured development areas, largely due to the close distance/ travel-time relationship with Hamilton City. Growth in these areas is a mix of lifestyle block development and small communities, often with the primary household income earner(s) working in the city (eg. around 78% of workers living in the Western Fringe work in the City, 45% of workers living in the Eastern Fringe work in the City, and 51% of workers living in the Ngaruawahia sector work in the City). On the other hand, relatively slow growth is expected to continue in the East rural areas, and in the Huntly area. In the Northern Rural Sector, there are some specific growth drivers expected to influence pockets of growth eg. a new resident workforce emerging that will support the new women’s prison in the Hampton Downs area and other potential development in this area, as well as some “Auckland” influence. According to the University of Waikato projections, October 2008 version, growth around the District over the next 20 years, 2006 to 2026, is expected as follows: Base +20yrs Future 2006 Growth 2026 • North Rural / TeKauwhata 4,530 +3,270 7,800 • West Rural / Raglan 5,415 +1,280 6,695 • East Rural / Whitikahu 2,110 + 180 2,290 • City fringe west 8,325 +3,940 12,265 • City fringe east 6,035 +3,945 9,980 • Southeast / Tamahere 6,585 +2,045 8,630 • Ngaruawahia township 5,300 +2,720 8,020 • Huntly township 7,100 + 810 7,910 45,400 +18,190 54,590 +40.0% So overall, future growth for Waikato District has these key elements: • growth is anticipated to continue at levels similar to or exceeding recent growth experiences over the past 5 years, at around +900 people p.a., but with obvious yearly fluctuations; • over a 20-year period 2006-2026, overall District growth is projected at +18,000 people , a +40% increase over current levels; • where this growth will occur is being strongly influenced by the attraction of Hamilton City as the dominant job market for the Region. Sectors surround Hamilton City on the eastern, western and northern fringes (including Ngaruawahia) can be expected to continue as the District’s strongest growth sectors – these sectors account for 70% of the District’s total growth expectations.



(c) Waipa District Growth Different from the Waikato District experience, growth around Waipa District has emphasised the two main town centres of Cambridge and Te Awamutu, plus growth in selected rural areas between Hamilton City and these towns centres. Population Growth @ 2006 2001-2006 • Northern Rural Sector 4,765 + 432 along the southern fringe of Hamilton City eg.Ohaupo,Ngahinapouri, Lake Cameron,TePahu, • Te Awamutu urban area 12,980 + 783 including Te Awamutu, Kihikihi, and Allen Road areas • Te Awamutu “rural” 3,275 + 384 including Pirongia, Te Rore, Te Rahu, Lake Ngaroto • Southern Rural Sector 3,525 + 99 including Pokura,Tokanui, Rotoorangi,Rotongata Te Awamutu “half” - Sub-total : 24,545 / +1,698 • Cambridge urban area 13,270 + 999 including Leemington • Cambridge rural 5,885 + 837 eg. Hautapu,Pukerimu, Kaipaki, Karapiro Cambridge “half” - Sub-total : 19,155 / +1,836 Total 43,700 +3,534 / + 9.1% Broadly, the District has two halves to it : the west with a focus around Te Awamutu, and the east with a focus around Cambridge. Additionally, the western half has a Northern Rural Sector that is distinguishable by resident shopping patterns that emphasise Hamilton usage over Te Awamutu. The Eastern half (Cambridge town+rural) had the largest growth in absolute numbers: +1,836 people, worth 52% of all District growth. And specifically Cambridge township has experienced the single largest population increase, but growth in the surrounding Cambridge rural sector has also been almost equal to the township. In the Western half, Te Awamutu township had the strongest growth increase in numbers. Growth in local rural sectors immediately surrounding the township was about half the township experience. The Northern Rural Sector at the City’s southern fringe is also a strong growth sector. While the rural area to the south of Te Awamutu had the slowest growth of any area. This area is furthest away from Hamilton City with reduced influences from the Hamilton market in terms of “lifestyle” land demand.



Overall, growth has been split evenly between town centres vs. rural areas: the 2 x town centres contributed 50.5% of all growth, and the rural areas contributed 49.5% of growth. Rural areas around Cambridge and in the Northern Rural Sector by Hamilton’s southern border had fastest growth; southern rural areas the least growth. The District Council’s building permit data confirms this growth pattern: Building Consents Issued for New Dwellings Ward 2005 2006 2007 • Cambridge 157 134 45 • Maungatautari (east rural) 52 64 35 209 198 80 • Te Awamutu 76 70 70 • Pirongia (west+north rural) 66 77 68 142 147 138 • Kakepuku rural (south) 22 17 43 375 362 261 . . . where Cambridge township had the highest number of building permits; . . . followed by Te Awamutu and Pirongia (Te Awamutu rural) areas. Turning to the question : how much future growth? -- Population projections have been prepared by University of Waikato—Population Studies Department, October 2008, (eg. medium projections, plus EDA—“economic development initiatives”). The District growth scenario is as follows Population Household Average Growth Growth Persons/dwelling • Base at 2006 43,700 16,085 2.72 • 2006 – 2011 : +2,950 +1,155 2.55 • 2011 – 2016 : +4,000 +1,845 2.17 • 2016 – 2021 : +4,950 +2,050 2.41 • 2021 – 2026 : +3,900 +1,700 2.29 Total : +15,800 +6,750 av.2.34 . . . over 20 yrs . . . Gross Average: +790p.a. +337 p.a. Broadly, these growth expectations are a continuation, if not an increase, in the recent strong growth levels experienced over the past 5 years around the District. Where growth is likely to occur is a key question. Growth in areas nearest to Hamilton City continue to be prime development ares. Eg. Northern Rural Sector, Cambridge Rural Area, and the townships of Cambridge and Te Awamutu. The University of Waikato Projections (October 2008) provide some guidance about where growth is expected.



Base +20yrs Future 2006 Growth 2026 • Northern rural 4,765 +2,185 6,950 • Cambridge township 13,270 +2,960 16,235 • Cambridge rural 5,885 +4,720 10,605 • TeAwamutu township 12,980 +3,860 16,840 • Te Awamutu rural 3,275 +1,795 5,070 • South rural 3,525 + 120 3,645 43,700 +15,645 59,345 +35.8% Noteworthy, future growth is split 45% to the “Eastern Half/Cambridge” and 55% to the “Western Half/Te Awamutu”. However, the Cambridge township +local rural area is expected to achieve the largest amount of concentrated growth (about 27,000) compared to the Te Awamutu township +local rural (22,000 people). In terms of accommodating this growth, the District’s growth strategy (Waipa Urban Growth Strategy, November 2003) provides guidance about where continued growth should occur around both town centres. In Cambridge, large growth opportunities exist on both sides of town – at the eastern fringe between the existing urban area and the proposed State Hwy bypass; and at the northwestern fringe adjacent existing urban development in the Leemington area. In Te Awamutu, future growth is provided for by way of several pockets of land mostly located around the town’s urban fringe. In rural areas, some lifestyle block subdivisions are being allowed, mostly in areas around Cambridge and also in the Northern Rural Sector around the southern fringe of Hamilton where highest demand exists. So the question -- “where will growth occur”, looks to be a continuation of the recent experience around the District with a continued “bias” to the Cambridge area. Overall, future growth for Waipa District has these key elements: • growth projections are looking at levels similar to very recent growth experiences of the past 5 years, around +800 people p.a., but with obvious yearly fluctuations; • over a 20-year period 2006-2026, overall District growth is projected at +15,645 people, a +36% increase over current levels; • where this growth will occur is expected to be a continuation of recent experience : - good growth in the 2 x town centres, and nearby rural areas, with Cambridge likely to receive more than Te Awamutu; - and also good growth in “northern” rural areas along the southern border of Hamilton City.



(d) Morrinsville Area Growth Different from all other areas in the Regional Study Area, growth in the Morrinsville Area is not a major planning feature. For example : Population Growth @ 2006 2001-2006 • Morrinsville township 6,770 + 408 (2,541 h/holds) • Tahuroa Rural Sector 2,590 + 27 (surrounding the township) ( 870 h/holds) 9,360 + 435 + 4.7% Recent growth in the Morrinsville area is “above-average” for the Matamata-Piako District and represents about 40% of all growth across the District. The nearby Te Aroha area (plus local rural areas) experienced similar growth at around +400 people (this is significant to Morrinsville retail because it is an area of “secondary support” to local businesses). The Matamata area in the south experienced growth at around +300 people. So overall, there is growth across the District, but in terms of absolute numbers this is small. Specifically in the Morrinsville Area, growth is occurring almost exclusively in the township. Turning to the question : how much future growth ? Projections have been prepared for the District Council by APR Consultants, August 2008, which suggest limited growth. In fact, across the wider District the population base is expected to be close to static. Specifically in the Morrinsville study area, growth is also expected to be on the “light side”, and the growth that does occur will be in the township: Base +20yrs Future 2006 Growth 2026 • Morrinsville township 6,770 + 500 7,270 • Tahuroa rural 2,590 ( - 30) 2,560 9,360 + 470 9,930 + 5.0% Overall, future growth for Morrinsville : • is small in terms of absolute numbers • will occur predominantly in the township • will not be a significant planning factor in generating future retail demand.



(e) Region-wide Growth Across the Study Region, future growth is expected to continue at above-average levels in most areas. Collectively, growth over the next 20-years is projected at: • +51,500 people / +18,940 households for Hamilton City, of which about half is expected in new growth cells at the City fringes (Rototuna in the northeast being the largest), and half within established areas. • +18,150 people / + 7,050 households for Waikato District, of which around 70% is expected in rural areas immediately fringe to Hamilton City along western, eastern and northern borders (including Ngaruawahia) • +15,800 people / + 6,750 households for Waipa District, of which around 45% is expected in the townships of Cambridge and Te Awamutu, and another 40% in rural areas directly around these townships. • + 470 people / + 190 households (estimate) for Morrinsville Area, of which most is expected to occur in the township. ____________ say,+85,900 people . . . . . being about a +37% increase over current levels. +32,930 households,



2. “Dairying is the Waikato” – a key local economic issue

The Waikato Region has long been an area known for dairy farming. “Dairying is the Waikato” correctly conveys the importance of this industry to the area. In spite of recent changes within the dairy industry and major shifts in production to new areas such as Southland, the Waikato is still the largest dairying region in NZ, worth some 28% of the country’s total milk production.

Even in today’s high-tech world, food supplies are a vital industry and dairy products continue to be staple food items. Current commodity prices for milk-solids are high, reflecting market scarcity/shortages due to a range of issues including some limits on production elsewhere in the world due to droughts and poor production techniques, and on the other hand expansion of the milk consumer market especially through China and India and other Asian countries.

Consequently, the economic future to the Waikato looks set to continue as an important “dairy farm” especially to Asian markets. In fact, more than dairying alone, the Waikato is an important “food bowl” to the world providing over $6 Billion/per annum in milk, meat, vegetables and fruit (with Dairying contributing 1/3rd of this). A recent report entitled “The Waikato Regional Economy”, prepared by the Department of Economics, University of Waikato (April 2007), identified some key issues about the dairy and agricultural industries to the Waikato economy : • The most profitable business sectors in the Waikato includes dairy farming; • The largest exporters in the Waikato includes dairy processing, worth over $2Billion per annum; over 90% of production is exported • After accounting for all linkages from initiating activity, the greatest percentage of employment and value added activity in the Region stems from Dairy Farming and Processing, followed by Education and Scientific Research, and then Sheep Beef Deer Farming & Processing; • The most important activity in the Region is still Dairy Farming & Dairy Processing which, after accounting for all backward and forward linkages, accounts for 17% of the Region’s employment and 24% of its GDP; • Dairying combined with other farming activities, and also with agricultural manufacturing, accounts for about 40% of the Regional economy be it employment or sales; • Between 2001 – 2006, dairy farming and dairy processing sales revenue has increased at around +9% p.a.; . . . so has sales in sheep & beef farming and meat processing; . . . with Agricultural Manufacturing even higher at +11% p.a. • In fact, the entire Waikato Regional Economy has increased at 9.6% p.a., underpinned by an improved dairy industry and strong population inflows (+11,500 new regional residents between 2001-2006, being additional to natural growth of the established population); The following TableF illustrates the growth achieved in key sectors of the regional economy.



TABLE F

As might be expected, growth in agricultural production has a significant influence on employment : • 17% is found in dairying and dairy processing plus directly “linked’ businesses; with another 12% in sheep-beef-deer farming and processing and other linked businesses. • Employment growth has been significantly above-average since 2004, contrary to the experience during 2000-2003 when it was below-average : . . . since 2004, growth has been strong +6.7% in the Waikato Region vs. +1.6% nationally, +1.8% in Auckland, and +3.6% in Bay of Plenty Region . . . but during 2000 - 2003, employment growth was below average: (-0.1%) for Waikato Region vs. +2.9% nationally +3.0% in Auckland +1.0% in Bay of Plenty These results demonstrate the variableness which goes along with farming industries, but the underlying trend is up. Hamilton City Focus The Greater Waikato Region is the beneficiary of strong dairying and agriculture, with Hamilton City being an important focus as the dominant commercial centre. The City accounts for a very significant portion of sales and employment from around the Region, as shown by “Table 16” taken from the Waikato Regional Economy report :



In other words, Hamilton accounts for : • around 40% of the wider Regional economy (as defined by the Waikato Regional Council area), • and around 70% of the economy of Hamilton-Waikato-Waipa Councils, (the Core Waikato area) . . . including 74% of all employed persons. Retail Sales Benefit Another item of analysis included in the Waikato Regional Economy paper was an assessment of “milk payout to retail sales”. A fifteen year time sequence was assessed (1991-2006) which shows a very strong correlation between the value of milk payout achieved vs. the amount of annual retail sales achieved.



With dairying worth 24% of the Regional Economy, and other farming and agri-manufacturing businesses worth a further 16%, there is little wonder at the tight correlation between Milk Payout and Retail Sales. Obviously around the Waikato, as dairying goes so goes retail. Or, as the economic report concludes, “Dairying [plus other farming activities] drives Waikato growth – and everything else”. This is an important fundamental to keep an eye on regarding future retail growth.



3. Hamilton City is the Employment Hub for the Region

A notable feature about the Study Region is the high level of influence which Hamilton City-based employment holds over the total employment structure. Data is available from Statistics NZ identifying the number of people in the labour force, and also “travel to work” data is available from the Census indicating the origin and destination of work trips (that is, where workers come from to undertake employment in area “x”). The size of the labour force “usually resident” in each territorial authority area can be found in Statistics NZ : 2006 regional summary tables. Specifically for the Waikato Study Area, the overall resident labour force is identified as follows: Total Unemployed Active Labour Force Labour Force • Hamilton City : 67,353 4,581 62,772 = 52% • Waikato District : 21,978 1,158 20,820 = 17% • Waipa District : 22,656 753 21,820 = 18% • Matamata-Piako : 15,720 588 15,132 = 13% (including Morrinsville) 127,707 7,080 120,627 =100% Travel to Work data from the Census identifies where people travel from and where they travel to for work. The following Table G identifies the results of this data over three time periods -- 1996, 2001, 2006 – and is focused on Hamilton City as the destination for work trips. Noteworthy trends over this ten-year period include: • employment/jobs filled by residents living within the City is declining in favour of more workers commuting into the city from elsewhere (as a proportion of the total labour force) ; • at 2006, some 77% of all city-based employment was filled by City residents vs. 79% in 2001, and 81% in 1996; • at 2006, of the 23% of workers coming from outside the City:

- 11% came from Waikato District - 8% came from Waipa District - 2% came from the wider Waikato “region”, including Morrinsville - 2% came from misc. elsewhere.

• Waikato and Waipa District resident workers account for 81% of all workers “living outside the city”. Further, these two areas are growing in importance as a source of employees to fill city-based jobs, now filling 19% of all city jobs at 2006, up from 17% in 2001 and 16% in 1996. • Hence, it is not surprising to find that the number of workers coming into Hamilton City from Waikato and Waipa Districts has increase by +41% over the past 10 years -- +3,300 new workers, filling 30% of all new jobs created in Hamilton.



TABLE G



Comparing Total “Resident” Labour Force with Travel to Work provides some indication about the movement of people between areas for work. For example: Total “Residential” Labour Force Travel to Work % Working (“actively employed”) in Hamilton in the City • Hamilton City 62,772 46,887 75% • Waikato District 20,820 6,570 32% • Waipa District 21,897 4,728 22% • Morrinsville Area 3,315 282 8% 108,804 58,467 54% average In other words: --in Hamilton, 75% of working residents actually work in the City, and 25% work elsewhere outside the City (20% within the Regional Area) --in Waikato District, 32% of working residents actually commute into the City --in Waipa District, 22% of working residents actually commute into the City --in the Morrinsville Area, 8% of working residents actually commute to the City. This work pattern has relevance to shopping patterns, especially for Waikato and Waipa working residents who are commuting into the City for work. Waikato has a high commuting rate – 32% of working residents travelling to the city, and Waipa is also high at 22%. And employment trends show that these areas are growing as sources of city-based workers. This means that a significant proportion of rural district residents are already making regular work trips into the city, and on these travel-to-work trips they also have an opportunity to undertake shopping. In fact, shopping is often done as part of a work trip. This issue was investigated in the household shopping survey, where it was asked : “Q12 - How often does the main wage earner do some shopping or errands on the way to or from work?” Key findings are as follows: Yes, Yes, At least Less than Weekly Weekly Never • Hamilton City 53% 12% 26% • Waikato District 53% 13% 26% • Waipa District 83% 12% 5% • Morrinsville Area 46% 6% 48% In the context of the above findings about place of employment vs. place of residence, it is clear that a significant proportion of rural district residents are commuting into the City and at the same time also undertaking some shopping. This is another feature to have regard to when considering potential need for any new retail floorspace and where this might be located. Given that regular travel to the City for work is always going to be a requirement on commuting workers, given that the number of commuting workers from the rural districts is a growing trend, and given that city-based jobs represents a growing proportion of all employment in the Region, the flow of workers to the city and associated side-shopping is a notable feature to retail shopping patterns.



4. “Real” Income and Retail Sales Growth Factor The importance of retailing to the average Waikato Household

If we examine the average household expenditure pattern, we see that about 70% of household income is spent at retail. The only significant non-retail expenditures are housing, health, and communication. Because the great majority of personal income is spent at retail, it is imperative that retail planning be conducted in a way that makes this expenditure convenient and personally satisfying. Significant under- or over-provision of retailing facilities will have a direct negative impact on overall quality of life.

Economic growth outlook

GDP in New Zealand is both cyclical and volatile, but is also reasonably insulated from downside risk. As of the end of 2008, New Zealand was in its first recession since a two quarter period of essentially zero growth in 1998 during the Asian crisis. This recession is part of the worldwide downturn driven by events in the United States. There is significant resilience to the New Zealand economy, and most economists expect our recession to be milder and shorter than those elsewhere in the worlds. A 3% average real growth rate still looks feasible for the long term.

The near-term outlook for 2009 is a continuing and moderate recession. Although confidence levels are currently low, longer-term fundamentals appear relatively sound, especially for the agriculturally-based Waikato economy.

The worldwide picture on inflation is presently unclear. There is a global trend towards price deflation of major assets including real estate, shares, most currencies, and commodities. There is also continuing inflation in food prices, services and other aspects of the economy. With the massive worldwide creation of new liquidity to fund



economic stimulus programmes, it seems that future inflation would be higher. This depends, however, on the world avoiding a slide into long-term deflation (Japanese style) or depression. At present, the outlook remains uncertain.

Worldwide inflation, but local benefit

Worldwide food prices have continued to rise in spite of deflationary pressures in other sectors. This increasing price trend has been augmented by a number of worldwide harvest shortfalls for staple crops. In addition, rising incomes across Asia have increased protein consumption by a large number of people. Taken together, these factors have recently driven demand faster than supply. Despite a recent falloff in food and non-food commodities, we expect food price inflation to remain high, driven by population growth and higher incomes.

This profitability trend looks fairly sustainable. There will always be year-to-year variations in climatic conditions and harvests. However, the long-term outlook for agricultural commodities is very positive. Static or declining agricultural acreage, along with an increase in climate-related harvest shortfalls, will probably constrain food supplies for the long term. This constrained supply will collide with increased demand from (a) growing worldwide population, with (b) more wealth and a desire for higher-protein diets. Based on this reduced supply/increased demand scenario, the long-term outlook for the Waikato agricultural economy is quite bullish.

Inflation and retailing

It is important to consider real volumes, not inflated nominal volumes, when planning for retail capacity. Inflation has the effect of increasing sales in terms of nominal dollar volume, but often reducing or at best remaining static in terms of real quantities of goods and services sold. As a result, higher dollar volumes can be sold through the same facilities without overloading capacities or inconveniencing customers.



Past experience also shows that wages and income lag behind inflation. This means that during inflationary periods, households will increase consumption at a slower rate, or even decrease real consumption for periods of time.

Projecting real retail growth rate

The Statistics New Zealand Retail Trade Survey as of September 2008 showed a national core retail sales growth trend which had fallen for five successive quarters. This represents the longest period of decline since the data has been collected beginning in 1995.

The chart below shows national retail sales growth, including vehicles and related items, in nominal (inflated) dollars:

For the longer term, we expect real sales growth to reoccur, at a moderate level. Consumers will have smaller real incomes, with a smaller percentage of this income available for discretionary spending, and be faced with broadly higher prices. There are three main factors that will moderate consumption:

• Reduced willingness of households to take on more debt, thereby reducing consumption expenditures. Post-crash of 2008, households continue to increase debt, but at a much slower level than before.

(Source: Bank of New Zealand, 12-2008)



• The reduction in house prices will make home equity withdrawal less feasible

• Inflation will probably continue at a rate higher than wage increases

Effects of compounding

There is a well-noted tendency in economics studies for most people to favour immediate consumption rather than saving for future consumption. This leads to a tendency to underestimate the effects of compound interest. This issue is critically important in judging the amount of retail space needed in future years.

The effects of compounding over a planning timeframe are clear: even a modest-seeming annual rate leads to exponential growth when compounded over time. Over 20 years, a 2% real growth rate would require a nearly 50% increase in retail sales.

Increase in retail sales required at real growth rate of:

Years 1% 2% 3% 4%

10 10.5% 21.9% 34.4% 48.0%

20 22.0% 48.6% 80.6% 119.1%

30 34.8% 81.1% 142.7% 224.3%

40 48.9% 120.8% 226.2% 380.1%

50 63.7% 169.1% 338.6% 608.5%

Overall conclusion: projected retail growth rate

When all factors, positive and negative, are considered, we judge that a prudent growth factor for the Waikato is real retail growth of about 1% per annum, not including the influence of population growth.



4. Demand for Additional Retail Floorspace In this section, we employ a model for future demand. We identify the methodology and assumptions used, and the outcomes for potential demand for new retail floorspace over the next 20-year planning period, 2006 -2026. Background: Modelling Retail Space and Land needs

How retailers respond to demand changes

Real changes in retail spending are measured in “constant dollars” by deducting inflation as measured by the Consumer Price Index (CPI). If retail spending increases in real terms, this means that more physical goods are sold, and more services produced and sold.

The retail environment will need to react to an increase in demand with a mix of three types of responses. Any or all of these responses may occur:

• Sell more goods and services through existing retail facilities, resulting in higher sales per square metre

and/or

• Expand existing retail facilities

and/or

• Build additional new retail facilities

The amount of new retail land required (if any) will be directly affected by a) the level of increased demand and b) the responses current and new retailers make to changing sales patterns.

Optimising retail space

There is an optimal level of sales for a given retail facility, which also holds true for shopping precincts and the overall retail network.

If retail sales per store are too low, ramifications include:

• Reduced employment per store

o Resulting in lower-intensity usage with less economic output

o Impairing customer service levels

• Lack of reinvestment, leading to deteriorating facilities

• Reduction of stock levels and variety

These issues may, in turn, lead to:

• Fewer customers



• A “downward spiral” as the retailer/area become unappealing

• Financial failures of retailers

• Store vacancies

If retail sales per store are too high, retailer profitability generally increases, but customer satisfaction reduces. This can reduce the long-term sales growth rate. Ramifications of selling too much per store (“overtrading”) include:

• Traffic congestion

• Difficulty in parking

• Crowded stores

• Above-average out-of-stock levels for products

• Reduced customer service

This will lead to a lower growth rate than would otherwise be achieved, and will often stimulate new competing stores to open. If the new stores are too large relative to the overall aggregate demand, the retailing system then has an oversupply of space. This can lead to reduced sales per store, with the problems noted above.

Overall, the retail market is constantly adjusting to too much, or too little, floor space due to a wide range of stimuli. The challenge for any planning agency is to have a retail strategy that can make available the ”right amount of retail space” with neither serious shortages nor gross oversupplies at any given time.

Strategic Concerns

Broader strategic concerns are worth mentioning in this regard.

Overspending: The Reserve Bank was concerned (as of 2007-2008) that New Zealanders were spending more than their current incomes, and this led to one of the tightest monetary policies in the world. Despite major reductions in interest rates in 2008, New Zealand rates are still above those in many other countries. The Reserve Bank would prefer that retail space be minimised to reduce this effect.

Employment: In terms of income and local employment, it should be noted that jobs in retailing require relatively low skills, and are quite low paid compared to manufacturing or other occupations. An over-provision of retail land may have an opportunity cost if more desirable employment options are bypassed.

Foregone amenities: Retailing is generally placed in prime, easily-accessible locations. Devoting these areas to retailing means they cannot be used for other purposes which may have higher amenity value.



Developing a Model for Appropriate Retail Space

Assumptions

Retailing spend by consumers is a direct function of personal income. Over the long term, total spending will be:

Based on household income statistics provided by the New Zealand Census and Statistics New Zealand, we can calculate average total retail spending per individual, and classify this spending by category.

We are currently assuming that, long-term, all personal after-tax income will eventually be spent (implying that net long-term savings are zero). This will vary year by year. In 2007, New Zealanders consumed about 14% more than their annual incomes through a process of dis-saving by tapping into increased home equity. Since that time, the 2008 worldwide credit crunch and share market crash have reduced property values. Although the effects in New Zealand have been less than other countries, there is a significant reduction in home equity, consumer confidence, and spending. This has led to a reduction in spending, especially for big-ticket items. Long-term, spending growth is likely to reduce to a level equal to, or below, income growth. In addition, programmes such as Kiwisaver will reduce current income (and retail spending) now, but allow for higher future spending.

Overall, we anticipate that the higher real spending increases of the past will disappear during the recession of 2008-2009, then return in a more moderate fashion. Long-term, retail spending will increase at the rate of real income growth (per capita) plus the increase in population growth. We estimate the total effect will be a 1% increase in real retail spending per capita. Increases in population will result in more spending over and above this growth rate.

= ± Net Income after Tax

(less savings made) or (plus savings spent)

Total spending per capita



Steps in the Model, Concept and Calculations

Stage 1: Calculate Total Future Retail Spending

Step 1: Project number of future residents in the catchment, based on Census and council information:

Calculation: We use population from the New Zealand Census 2006 as a baseline. Future population projections use figures from Waikato University, the “PDA Medium EDA 2006” base [October 2008], which assumes additional successful economic development programmes around the region.

2006 Census Projected 2011 2016 2021 2026

Waikato 45,400 49,174 53,424 58,937 63,593

vs 2006 108.3% 117.7% 129.8% 140.1%

Hamilton 134,400 146,579 159,585 173,346 185,907

vs 2006 109.1% 118.7% 129.0% 138.3%

Waipa 43,700 46,630 50,623 55,466 59,343

vs 2006 106.7% 115.8% 126.9% 135.8%

Morrinsville 9360 9600 9750 9830 9830

vs 2006 102.6% 104.2% 105.0% 105.0%

Total 232,860 251,983 273,382 297,579 318,673

vs 2006 108.2% 117.4% 127.8% 136.9%

Overall, these projections assume population growth of +37% in the study area over the next 20 years. Note that these projections are aggressive, and are roughly equal to Statistics New Zealand’s “high case” growth estimates. This implies that projections of future retail space needs, based on these population projections, are more likely to overestimate future needs.

Current Residents New Residents = + Total Future Population



Step 2: Calculate current retail sales per capita as a national average:

Calculation: We use the Statistics New Zealand Retail Trade Survey, March 2008, and 2008 population [from Waikato University, “PDA Medium EDA 2006” base, October 2008] to calculate:

Total Retail Sales 2008 $ (millions)Excluding vehicles, fuel,

repairs, accommodation 44,706.00$

Divided by Population 2008 4,262,900

=

Retail sales per capita 10,487.23$ (national average)

- Total retail sales 2008

Less vehicles & accommodation

÷ Population

= Current retail spend per capita



Step 3: Calculate local retail sales per capita:

Calculation: We use the 2006 median income statistics by district from the New Zealand Census. This analysis uses the generally accepted assumption that retail spending varies proportionally with income: higher income individuals will spend more, and lower income individuals will spend less.

Median

Income

Indexed

vs.

National

Median

Income

Estimated retail sales per

capita March 2008, ex

vehicles, hotels

Waikato District $25,800 105.7% 11,088.96$

Hamilton City $24,000 98.4% 10,315.31$

Waipa District $26,500 108.6% 11,389.82$

Morrinsville $26,265 107.6% 11,288.79$

National $24,400 100.0% 10,487.23$

× National per capita retail sales 2008

Local income levels as a % of national

= Local retail sales per capita



Step 4: Project total retail sales, excluding future real growth:

Calculation: We use local retail sales from Step 3 above, and multiply it by current and future population. This calculation at this stage excludes future economic growth. Note that current retail spending in the study area is approximately $2.4 billion, excluding vehicles/fuel/repairs and accommodation.

2008 Spend 2006 PSC Med Projected 2011 2016 2021 2026

Waikato

Population 45,400 49,174 53,424 58,937 63,593

Retail Spend 9,831.41$ 446,346,043$ 483,449,787$ 525,233,282$ 579,433,849$ 625,208,897$

Hamilton

Population 134,400 146,579 159,585 173,346 185,907

Retail Spend 10,026.54$ 1,347,566,708$ 1,469,679,914$ 1,600,085,068$ 1,738,060,257$ 1,864,003,601$

Waipa Population 43,700 46,630 50,623 55,466 59,343 Retail Spend 10,632.23$ 464,628,338$ 495,780,764$ 538,235,248$ 589,727,125$ 630,948,271$

Morrinsville 9360 9600 9750 9830 9830

Retail Spend 11,288.79$ 105,663,074$ 108,372,384$ 110,065,703$ 110,968,806$ 110,968,806$

Total 2,364,204,163$ 2,557,282,849$ 2,773,619,300$ 3,018,190,037$ 3,231,129,575$

× Total population (current / future)

Total retail spending per capita

= Unadjusted total spending



Step 5: Add in economic growth in real spending, assuming that retail spending per capita increases at a 1% per year real (uninflated) rate, and population growth as noted above.

2006 Census Projected 2011 2016 2021 2026Waikato Population 45,400 49,174 53,424 58,937 63,593

Per capita retail spend 9,831$ 10,333$ 10,860$ 11,414$ 11,994$

Total retail spend 446,346,043$ 508,105,726$ 580,172,684$ 672,722,699$ 762,754,855$

Hamilton Population 134,400 146,579 159,585 173,346 185,907 Per capita retail spend 10,027$ 10,538$ 11,075$ 11,641$ 12,232$ Total retail spend 1,347,566,708$ 1,544,633,590$ 1,767,453,966$ 2,017,887,958$ 2,274,084,393$

Waipa Population 43,700 46,630 50,623 55,466 59,343



Morrinsville Population 9360 9600 9750 9830 9830Per capita retail spend 11,289$ 11,865$ 12,470$ 13,106$ 13,772$


Total study area spend 2,364,204,163$ 2,687,704,275$ 3,063,739,879$ 3,504,118,633$ 3,941,978,081$

Future retail Spending based on growing population plus 1% p.a. real spending growth

Note that a 1% rate of real spending growth, when combined with projected population growth, takes retail spend per capita up by 67% over a 20 year period, resulting in total spending of over $3.9 billion in the study area (in 2008 dollars).



Step 6: Assess net leakage, using license plate survey data (for inward leakage) and household survey data (for outward leakage). We assume that inbound and outbound shoppers will spend at the same rate as local shoppers. Note that the area is highly self-contained, with negligible outward leakage (about 4%), but also benefits from large inward leakage (about 22%).

Actual % of

weekend

shoppers

Assumption:

weekday shoppers

as a % of weekend

shoppers

Calculation: % of

weekday

shoppers

Total % of volume

at 50% weekend,

50% weekend

Broader Waikato 9.9% 50% 4.9% 7.4%

From Bay of Plenty 7.1% 30% 2.1% 4.6%

Auckland 8.7% 30% 2.6% 5.7%

Elsewhere in NZ 6.1% 30% 1.8% 4.0%

31.8% 11.5% 21.6%

Outward leakage to: All days

Waikato to Auckland -3.6%

Hamilton to Auckland -0.5%

Waipa to Auckland 0.0%

Morrinsville to Auckland 0.0%

-4.1%

TOTAL NET LEAKAGE Waikato District -3.6%

Positive number denotes a net gain Hamilton City 21.1%

Waipa District 0.0%

Morrinsville 0.0%

Inward leakage from:



Step 7: Calculate total current and future spending, by adding in effects of positive leakage to the unadjusted spending totals from Step 5:

Leakage 2006 Census Projected 2011 2016 2021 2026Waikato Population 43,400 49,174 53,424 58,937 63,593



With outward leakage -3.6% 411,322,626$ 489,813,920$ 559,286,467$ 648,504,682$ 735,295,680$

Hamilton Population 131,700 146,579 159,585 173,346 185,907 Per capita retail spend 10,027$ 10,538$ 11,075$ 11,641$ 12,232$ Total retail spend 1,320,495,055$ 1,544,633,590$ 1,767,453,966$ 2,017,887,958$ 2,274,084,393$ Net inward leakage 21.1% 1,599,119,512$ 1,870,551,277$ 2,140,386,752$ 2,443,662,318$ 2,753,916,200$

Waipa Population 42,500 46,630 50,623 55,466 59,343



No leakage 0.0% 451,869,665$ 521,065,583$ 594,534,655$ 684,673,193$ 769,756,891$

Morrinsville Population 9360 9600 9750 9830 9830Per capita retail spend 11,289$ 11,865$ 12,470$ 13,106$ 13,772$


No leakage 105,663,074$ 113,899,376$ 121,578,575$ 128,834,783$ 135,381,943$

Total study area spend 2,567,974,877$ 2,995,330,156$ 3,415,786,449$ 3,905,674,975$ 4,394,350,714$

Future retail spending, with growing population, 1% p.a. real spending growth, and leakage

These 7 steps result in a sound estimate of the total retail spending that can be expected in the study area in the future.



Stage 2: Calculate Total Future Retail Space Requirements

Step 1: Calculate current retail sales per square metre. Take the total retail spend in Stage 1, Step 7, and divide it by the estimated square metres of retail space currently operating, approximately 448,700m2GFA. This will provide a good estimate of the current rate of sales per square metre in this marketplace.

Total study area spend

in 2008 2,567,974,877$

Current floorspace 448,700

Sales per square metre 5,723.14$

Step 2: Calculate approximate future space requirements. Take the total estimated future sales, and divide them by the sales per square metre from Stage 2, Step 1. This will result in an estimate of the required future square metres if they were to sell at the same rate as current retailers. We believe that most Waikato-area retailers would like to trade at a higher rate of sales per square metre than they are currently achieving, which implies that future space needs could grow more slowly than gross sales.

Total study area

spend in 2026 3,231,129,575$

Total study area

spend in 2026 3,941,978,081$

Total study area

spend in 2026 4,394,350,714$

Current sales per

mt. 5,723.14$

Current sales per

mt. 5,723.14$

Current sales per

mt. 5,723.14$

Implied sq. mt. 564,572 Implied sq. mt. 688,778 Implied sq. mt. 767,821

Increase vs. current 26%



Potential future

floor space

demand 115,872 240,078 319,121

Population growth only Population growth plus 1% Population growth plus 1% plus leakage



Summary: The region now has about 448,700 sq. metres of retail space currently operating. The estimate above suggests the following demand over the next 20 years:

(i) + 115,000m2 (+26%) if retail floorspace is driven by population growth alone;

(ii) or, +240,000m2 (+53%) if retail floorspace is driven by population growth and a real growth in income and retail spending of +1% per annum;

(iii) or, +319,000m2 (+71%) if retail floorspace is driven by population growth and a real growth in income and retail spending of +1% per annum, and some inbound leakage is accounted for.

Some of this growth in floorspace could be provided by already consented developments, or latent capacity able to be developed within recognised retail centres and commercial zones.

In addition, some of the growth in floorspace demand could be provided by increases in retail productivity trends. For example, it is noteworthy that if productivity of existing retail space as a measure of sales/m2 was increased by 10% [ that is, if average sales achieved per sq. metre increased from $5723 (as used in the above projections) to $6295 ], then demand for new retail space would decline by between 50,000 and 70,000 sq. metres.

Total study area

spend in 2026 3,231,129,575$

Total study area

spend in 2026 3,941,978,081$

Total study area

spend in 2026 4,394,350,714$

Sales per mt.

+10% efficiency 6,295.46$

Sales per mt.


Sales per mt.


Implied sq. mt. 513,248 Implied sq. mt. 626,162 Implied sq. mt. 698,019




Potential future

floor space

demand 64,548 177,462 249,319

Population growth only Population growth plus 1% Population growth plus 1% plus leakage

Further discussion follows in the next section about where future retail floorspace can be provided.



5. “Where” to Provide for Additional Floorspace Report Sector 4 considered the “demand” issue to help identify a likely range of new retail floorspace potentially required over the next 20 years. The results identified : • Current Base = 448,700m2 ... plus future growth for 20yrs to 2026... • Option (i) = +115,000m2 based on population growth only; • Option (ii) = +240,000m2 based on population growth and +1% p.a income/spending growth • Option (iii) = +319,000m2 based on population growth and +1% p.a income/spending growth and inbound leakage influences. A subsequent question is : where should this additional floorspace be provided? Hamilton City As the main regional commercial centre, Hamilton City is an obvious starting point for this assessment, but we also look at local features in Waikato and Waipa and Morrinsville areas. The research undertaken during this project has confirmed the importance of Hamilton to the wider Region, recalling key findings like:

• around 26% of customers to the three major city retail centres come from Waikato-Waipa-Morrinsville; plus, there is a significant “tourist/passing traffic” component worth another 24%;

• over 50% of Waikato District residents make use of Hamilton businesses on a regular basis for a wide range of retail activities;

• Waipa residents making strong use of local town centres for many retail goods but relying on Hamilton businesses for specialist goods;

• Morrinsville residents have a shopping pattern similar to Waipa residents, making strong use of local town centres for many retail goods but relying on Hamilton businesses for specialist goods;

As a starting point, we have investigated what opportunities exist for new development within existing commercial centres. To do this we have undertaken interviews with major retail property owners in Hamilton, and also discussions with council officers to identify known potential future retail developments. Business Interviews (i) Major Retail Property Owners We were able to obtain interviews with representatives from the 5 x major retail property owners around the City: Tainui Group Holdings, Jonmar Property/AMP Group, Westfield NZ Limited, Kiwi Income Property Trust, and Dominion Funds Limited. We discussed with the management at these businesses their views on future retail development around Hamilton and for their specific land holdings.



• Tainui Group Holdings Limited (meeting with Nathan York, general manager property) Tainui Group is a major landowner around Hamilton City. Its property interests

range across retail, hotels, offices, education, residential, and rural activities. In a retail context, the Group’s primary asset is The Base, a major retail centre

located in Te Rapa at the northern edge of the city. The Base is a large multi-staged development. To date, around 36,000m2GFA has been developed with emphasise on large-format retailing but also including a freestanding Dressmart Centre. Future development capacity for another 25,000m2 has received planning consent, broadly falling into two parts : more large-format retailing up to around 7,000m2, and a new integrated mall at around 18,000m2.

Into the future, the Group expects to see the Base will go through an evolution where is becomes more of a “town centre” with a broadened range of activities including offices, leisure/recreation, and motel/hotel accommodation. A major railway station/ transportation hub is being provided for.

A second retail project involving Tainui Group is as the owner of the WINTEC

tertiary education site, located central to the CBD. Particularly relevant to this site is potential re-development of land directly along Ward Street frontage for retail purposes. This land is directly across the street from the Hamilton Central Mall, and across the street (across Anglesea Street) from Downtown Plaza and Centre Place and the core retail focus to the CBD.

Re-development of Ward Street into more of a “main street” character is one of

the matters which the City Council has been working on recently as part of its City Heart Revitalisation project. The main focus for upgrading Ward Street has been in the precinct between Angelsea St and Victoria St (generally between Centre Place and Downtown Plaza, with Ward Street running through the middle of these two centres). None-the-less, Tainui have collaborated with Council and other property owners (including Dominion Funds, owner of Hamilton Central Plaza across the street from WINTEC and fronting Ward Street) about integrating Ward St. “west”” precinct around WINTEC with Ward St. “east”.

Main-streeting Ward Street has wider application to the City’s vision to more

closely integrate the CBD with re-development work around the city centre including work proceeding at Claudelands Events Centre and the need for associated upgrading between these two activity centres.

A third matter mentioned by Tainui is an interest to broaden the City’s east-west

focus and minimise its north-south extention. In particular, Tainui is the owner of land in the Ruakura area (eastern fringe of the city), and would like to see a significant part of this land used to emphasise new industry and business as a means to help break-down the “live in the east, work in the west” scenario that currently applies. Specific to retail, it has been suggested that part of this area could include some form of “suburban retail centre” – something considerably less than The Base or Chartwell, and more akin to a Thomas Road or Dinsdale scale centre with a distinctly local business trading focus.

• Jonmer Property/AMP Group (discussions with David Haines from Haines Planning,

as representative for Jonmar Property; also with Darren Pocock, AMP development executive)



Jonmer/AMP are now joint owners of the “Supa Centa” site in Te Rapa. Jonmer has undertaken several “supa centa” projects around the country, its largest being the Manukau Supa Centa at Manukau City Centre. AMP Group has been a major retail developer and long-term investor over many years, with its current “signature project” being Botany Town Centre in Auckland. Their Hamilton property is about 1km north of The Base, and is currently comprised of Placemakers and Harvey Norman operations but otherwise is vacant land with capacity for considerable new development up to around +35,000m2GFA. The site has a Commercial Services Zone, enabling retail development for large-format retail and/or an integrated mall if greater than 5,000m2,



These companies confirmed their long-term interest in developing the site for retail. In the short-term, the nearby Base has achieved stronger development momentum, but ultimately development will proceed on the Supa Centa site – it is seen as only a matter of timing. AMP in particular has a long-term business vision and practices land banking to provide for future development opportunities; their Hamilton site is seen in this light.

• Westfield NZ Limited (meeting with Clive Mackenzie, general manager development;

and Allan Lockie, development executive) Westfield is the largest shopping centre owner in New Zealand, and in Hamilton is

the owner of the Chartwell Mall located in the northeast sector of the city. During 2006/2007, Chartwell was expanded by +8,000m2 including expansion of a Foodtown supermarket, new shops, and a new cinema complex around 3,500m2. This lifted the total centre size to around 22,000m2GLA.

Planning consent for further expansion has been recently issued in March 2008,

enabling the addition of a further +7,000m2 through expansion of the centre in a southerly direction by converting existing open carpark land into shops plus a carpark building. When complete, total centre size will be around 29,000m2 – a significant shopping centre within a NZ context – cf. Westfield 277 Newmarket, 22,000m2; Westfield Glenfield, 31,000m2; Westfield Manukau City, 32,000m2;

Our discussions with management highlighted their interest in expanding

Chartwell even further, as and when it was economic to do so. They also put forward their opinion on future retail development for Hamilton City, which is an interest to see a “centres based” strategy adopted including integrating retail centres with public transport. They also expressed concern to avoid any changes to existing retail controls in industrial zones which might reduce permitted retailing below the existing 1000m2GFA minimum size, because a collection of multiple smaller shops could create alternative focal points outside of acknowledged “centres” for traditional specialty shop retailing in areas like fashion and homewares, with consequential dispersion of shopping and dilution of economic strength away from established centres. This is an approach which the company has generally adopted in many planning exercises around the country.

• Kiwi Income Property Trust (meeting with Mark Luker, general manager development;

and Ivan Bartley, development manager) Kiwi is a large national property company with development interests spanning

many activities including shopping malls. Their “signature retail project” currently is Sylvia Park in Auckland, but locally Kiwi operates the two largest shopping centres in the CBD precinct – Centre Place, and across the street is Downtown Plaza.

Philosophically, management confirmed its commitment to a “centres based’

development strategy for the city which emphasises the use and enhancement of existing assets. They reiterated some fundamental economic differences between central city / shopping mall retailing and more fringe retail locations, where basic rent/operating costs can differ by 200-300%. It was acknowledged that not all retail tenants can afford to pay higher rentals, but cautioned that if a major retail focus with a significantly lower cost structure, is developed outside acknowledged centres, then it becomes very difficult to maintain/attract tenants in central locations and difficult to justify any additional investment in central city properties.



At this time, Kiwi management has expressed its strong interest in re-developing

and expanding its central city properties. Adjacent properties to the two main shopping centres have been acquired to help round-out development potential. A comprehensive redesign of all properties is underway with an intent to achieve stronger integration on all fronts -- linking Centre Place with Downtown Plaza, with Garden Place and other CBD retail beyond, with Ward Street frontage (on the south side including “main streeting” building fronts and walkways), and with Barton Street precinct (on the north side).

Essentially, the Kiwi land holding can be considered a core location to the City’s

CBD, with important linkages in all directions. At this time, up to around +20,000m2 of expansion is under consideration – this is 100% increase over the current retail base of 15,500m2 in Centre Place and 5,000m2 in Downtown Plaza.

If redevelopment of the magnitude suggested did occur here, it would represent a

very significant commitment to the future strength of the CBD business base, and is a matter that requires regard in any future retail strategy.

• Dominion Funds (meeting with Andrew Bishop, national retail manager) Dominion is the owner of Hamilton Central Mall, located at the western fringe to

the CBD precinct; it is more or less across the street (across Angelsea Street) from Centre Place and Downtown Plaza, across Ward Street from WINTEC and its concept for street front redevelopment, and adjacent a new freestanding Warehouse building.

Today, Central Mall consists of a large K-Mart department store, and about 20

other small shops. Dominion acknowledges that currently the centre is in an undesirable state, and a comprehensive re-development is being planned. Dominion has collaborated with the City regarding the “main-streeting” of Ward Street frontage, and Dominion’s redesign of its centre includes expansion onto properties fronting Ward Street (which currently have non-retail uses like vehicle servicing).

The challenge for the Central Mall is how to best integrate with the CBD retail cor,

which requires crossing Angelsea Street, plus some improved integration with the adjacent Warehouse site.

At the broader city level, management’s opinion about a city-wide retail strategy is

that it is imperative for the CBD to have a “distinction” from other retail centres, and that such a distinction can be primarily achieved through emphasising specialty shopping like fashion, homewares and design, and “lifestyle” activities like eating and entertainment. This distinction will help to maintain customer flows into city businesses and a general vibrancy in the CBD. On the other hand, concern is held over any freeing up of retail development outside of acknowledged centres, which will result in diluted customer flows into the CBD and reduced justification for any investment in central city development/re-development.



(ii) Council Officer Discussions We were able to confer with council officers regarding the status of any major new retail projects either approved or in various planning stages. There are several to have regard to. • Approved planning consent has been granted for expansion at The Base, up to

+25,000m2. This has been explained above, under Tainui Group. • Approved planning consent has been granted for expansion at Chartwell Mall, up to

+7,000m2. This has been explained above, under Westfield. • Te Rapa “Homezone” - Approximately midway between the CBD and The Base,

along Te Rapa Road near Vardon Road intersection, is a new retail centre that has planning consent to proceed. It is described as a “homezone” centre – primarily a focus for home improvement type businesses. The site is adjacent the existing Bunnings Hardware site which is a very large DIY outlet around 10,000m2 GFA. The site is large, some 4.5 ha, and development is progressing in stages : a new car sales dealership has just opened along part of the Te Rapa Road frontage; a series of small shops up to 1250m2 GFA is intended to be developed along the remainder of the road frontage; and behind the roadfront businesses is the bulk of the site which is predominantly for large-format retailing up to around 12,250m2GFA. Overall, around +13,500m2GFA in new retail space can be added.

• Rotokauri Suburban Centre - Rotokauri is a major growth cell in the northwest of

the City. Long-term, a future population of up to around 20,000 people is expected in this area. A notable feature about this growth cell is that it is reasonably self-confined by major surrounding geographic features, and located very closeby to The Base and other retail activities in the Te Rapa area. Hence, requirements for new retail facilities are expected to be limited to predominantly “local everyday-type goods and services”.

A structure plan has been prepared to guide future development in Rotokauri,

including provision for two local commercial centres: a main “suburban centre” with around 6ha land area for a combination of retail and community facilities (around 10,000m2 GFA retail anticipated) is intended in the southeast portion of the growth cell; and a smaller “local neighbourhood centre” of up to around 1ha in land area (around 2,500m2 GFA retail) is intended in the northwest portion. These centres are likely to proceed in stages, with residential development starting from the southeast corner nearest existing urban development. Current anticipated growth rates are for around 4,400 over the next 20 years, and ongoing growth thereafter, so is it likely to be many years before this centre actives it full potential.

• Rototuna Town Centre - Rototuna is the major growth cell at the northeast fringe

of the City. A notable feature about this area is that it is strongly self-defined by major geographic barriers, with the net result being that future retail need is primarily a consideration of “demand” from new growth within the local area; little additional business influence is expected from outside the growth cell.



Rototuna is the most active growth cell in the City today. New population growth has been occurring over several years. Over the past 10 years, some 50% of all city growth has occurred here. Ultimate population capacity is estimated at around 30,000 people, with 15,000 people already in the area as at the 2006 census – that is, about half of the ultimate development capacity has occurred.

Long-term, there is potential for additional development to occur further north of

Rorotuna, in an area known as the HT1 growth cell. The ultimate development capacity in HT1 could be as much as +20,000 or as little at +5,000, depending on alternative land uses in the area which are still under consideration.

Overall, a population base of between 35,000, and maybe up to 50,000, requires

planning consideration across the Rototuna catchment. Today, a suburban-scale retail centre already exist in this area at Thomas Road

(actually two centres across the street from each other). But in the longer-term some additional retail demand is expected, as well as the need for some local business/light industry, and also a range of community facilities. Broadly, a “town centre” with mixed uses is anticipated rather than simply a retail centre.

A draft structure plan is under preparation for the Rototuna area and particularly

the town centre, including general provision for around 4ha of land for retail (around 10-12,000m2 GFA retail space), plus around 3ha for a range of community facilities, and also 6 – 8ha for business / light industry.

[Note : this is still subject to ongoing assessment depending on final decisions being made about land-use allocations across this catchment.]

• Peacockes Growth Cell - Peacockes is at the southwest fringe of the City. A draft

structure plan has been publicly notified, with hearings expected during 2009. The structure plan identifies a long-term population capacity of around 20,000 people expected to occur in stages spanning many years. Current anticipated growth is for around 5,700 people over the next 20 years, which ongoing development thereafter.

A distinctive feature about this area is some strong topographic gully features

which “fracture” the area into sub-sections. The significance of this to planning for new retail facilities is that the geography makes it difficult to achieve a “central location” for just one major suburban centre.

Therefore, a more likely development scenario is to plan for expansion at the

existing Glenview Suburban Centre which is relatively closeby and has surplus land, plus plan for one or two local neighbourhood centres within the growth cell – say one in the northern half, one in the southern half. These neighbourhood centres are envisaged to be similar to a “Flagstaff Centre” in terms of function and scale of development, providing very local shops and services only.

All up, 2 x neighbourhood centres plus some expansion to Glenview might add

around +10,000m2 GFA retail space over time.



• Ruakura Growth Cell - Ruakura is located along the eastern fringe of the City. This

area is generally referred to as R-1 and R-2 growth areas. Limited planning has been undertaken for these growth cells, but broadly two options are under consideration: residential in the northern half, with business/ light industry in the southern half around the Ruakura research and IT business park; or expanded industry/business throughout most of the area.

Given the uncertainties in planning for this area, retail planning is also limited at

this time. Initial thinking has considered a “local suburban centre” of perhaps 4-5ha land area (10-12,000m2 GFA retail).

Besides new growth, one factor in support of this centre is the general absence of supermarkets in the southeast sector – there is only one locally at Hillcrest, otherwise one at Chartwell in the northeast, or else several across the river in the CBD precinct. Research results from the household survey clearly noted this concern from southeast sector residents. A new Ruakura suburban centre could help meet this supermarket shortage. The actual location of this new centre is still a matter to be determined.

• Retail in Industrial Zone - Currently, the City’s district plan provides for some retail

within its Industrial Zone generally as follows : shops under 150m2GFA or over 1000m2GFA are permitted activities, subject to only one shop per site. At this time, use of this provision has occurred mostly in the Te Rapa area and only along parts of the road frontage; other industrial areas around the city have not experienced much retail demand.

For example, over the past 5-year period 2002-2007, a New World Supermarket

has been built in Te Rapa (around 4000m2GFA); also in Te Rapa, an industrial warehouse conversion has occurred providing 3 x new large-format retail outlets – Furniture, Plastics Centre, and Top Town car wheels/stereo outlet; also, a new Mitre 10 MEGA outlet in The Base has been established using this provision (around 10,000m2GFA).

Therefore, into the future, there remains some latent development capacity within

industrial zones to provide for certain types of retail businesses which can operate in such locations – mostly large-format retailers but only those that can operate on stand-alone sites because they are capable of generating their own customer flows (rather than being part of a larger centre which is a preferred location for many businesses, as demonstrated by the growth in development at The Base compared to the limited growth occurring in general industrial areas).

• Retail in Fringe CBD - The core CBD has its own unique zone within the City’s

district plan. Surrounding the core is a large area of Commercial Services Zone which provides for a wide range of activities including large-format retailing. In this area is found a wide range of existing large-format businesses including 5 x supermarkets, several home improvement businesses like lighting, plumbing, bathroom and kitchen design, Placemakers, paint stores, furniture and home furnishings, and so on.



Around the CBD there is no surplus or vacant land per se, but re-development is a regular feature of city growth including around a city centre. One of the key reasons for zoning new land for retail growth in the Te Rapa area was the shortage of suitable commercial land in existing centres like the CBD particularly for the creation of an integrated LFR shopping centre.

Land holdings here are often small, and the task of amalgamating adjacent sites

to enable retail development is a long and costly process, and more often than not fails to achieve the desired outcome. Hence, the potential for any large-scale development like a new shopping centre is highly questionable, while the potential for one-off freestanding developments remains. Little of this type of development has actually occurred in the past 5-years. Still, the opportunity exists for some retail businesses, and this might be somewhat more encouraged in part by current changes in the vehicle sales industry which is seeing a rationalisation in used car lots – the significance being that a large number of car sales yards are found around the fringe CBD precinct, and alternative activities might become more attractive.

Overall, between proposals for expansion at existing centres by major shopping centre owners, plus proposed new centres in suburban locations within new growth cells, plus some latent development capacity within industrial zones, the cumulative total for potential new retail floorspace looks to be significant – around +165,000m2GFA. Noteworthy is the fact that this potential growth in new retail space spans opportunities for a wide range of retail activities, from “local everyday goods” to specialty retailing to large-format retail. Table H, following, outlines the potential growth in new retail floorspace around Hamilton City. MAP 14, following, identifies the locations for new retail development.



TABLE H

KNOWN FUTURE RETAIL DEVELOPMENT OPTIONS

•• HAMILTON CITY •• Estimated Expansion / m2GFA A. CBD Core and Fringe Areas

1. Centre Place + Downtown Plaza redevelopment by Kiwi Income Property Trust, including Ward St frontage +20,000m2 GFA

2. K-Mart Plaza, redevelopment by Dominion Funds, likely expansion to existing floorspace is limited + 5,000m2 GFA but some new retail development along Ward St frontage

3. WINTEC/Ward St frontage re-development by Tainui Group, alternative “non-educational” activities + 5,000m2 GFA

4. CBD Fringe (outside main shopping centres), potential for expansion to existing floorspace + ??? m2 GFA through redevelopment of alternative activities eg. redevelopment likely for one-off freestanding projects, but land holdings not likely to be large enough to enable any comprehensive shopping centre development.

B. Te Rapa Area 5. The Base, continued expansion by Tainui Group

-- approved within existing Commercial Services Zone + 25,000m2 GFA + -- future potential in “industrial” zoned land, subject to one shop per site at minimum 1000m2 GFA + 10,000m2 GFA eg. recent development of Mitre 10 Mega = 13,000m2

6. Supa Centa, Te Rapa, ongoing development -- currently includes only Harvey Norman and Placemaker stores, but additional development potential on zoned land up to around +30-35,000m2 GFA + 35,000m2 GFA -- joint ownership : Jonmer Properties and AMP

7. Te Rapa Homezone, along Te Rapa Road adjacent existing Bunnings Hardware,

Potential for +12,000m2 GFA new large-format retail + 12,000m2 GFA And also +1,250m2 of small shops + 1,250m2 GFA

8. Other Industrial Zone land with Te Rapa Road frontage, For potential redevelopment into large format retail + ??? m2 GFA

C. Chartwell Area 9. Westfield Chartwell, further expansion approved + 7,000m2 GFA

TOTAL “Main Centres” +120,250m2 GFA PLUS “latent” potential from other sites around the CBD fringe+Te Rapa industrial area, as noted -- exact m2 sizes are undetermined at this time



TABLE H (cont.)

D. Other Suburban Areas

10. Rotokauri suburban centre, eg. 4-5ha retail land x est. 25% site-coverage = + 10,000m2

+1ha: 2nd small centre x est. 25% coverage = + 2,500m2

11. Rototuna “town centre” mixed use area, eg. 4ha retail land x est. 25% site-coverage = + 10,000m2** +3ha community uses eg. pool/gym, library, meeting rooms =6-8ha for business/light industry **NOTE that final centre size is still subject to final determination of land uses in the surrounding catchment

12. Ruakura suburban centre eg. 4-5ha commercial x est. 25% site-coverage = + 10,000m2**

**NOTE: this centre is still subject to more planning details and retail assessment pending clarification on intended development in this area

13. Peacockes growth cell eg. (i) some expansion to existing Glenview Centre to cater for growth in Peacockes growth cell = +4-5,000m2 (ii) 2 x neighbourhood centres within growth cell = +4-5,000m2

TOTAL “Suburban” SAY, + 42,500m2 GFA HAMILTON CITY : TOTAL SAY, + 162,750m2 GFA



MAP 14



Waikato District Just to recap, Waikato District includes areas to the north, west and east of the City. This is a large land area with a relatively light population. There are two main town centres, Huntly and Ngaruawahia, with township populations of 5-7,000 each. Otherwise, the District population is rurally based. Around 30% of residents live in the two town centres, and 70% of residents live in rural areas. A closer look at the population distribution confirms another important feature – that almost 60% of residents live within about a 15-20 minute drive of Hamilton City, broadly split 20% on the western fringe, 30% on the eastern and southeastern fringe, and 10% along the northern boundary including Ngaruawahia. The remaining 40% is allocated : 25% in Huntly and further north (influenced by Auckland retailing), and 15% in the Raglan and west coast sectors. Given the wide-spread and low-density distribution of the population, future demand for most retail floorspace is going to have to be met “outside” local areas, excepting for “everyday convenience” goods and services activities. Population numbers and retail spending capacity are too small to support most large-scale and specialty retail businesses. Results from the household shopping survey confirm the strong customer usage pattern supporting Hamilton retail businesses and the more limited shopping pattern supporting local retail businesses. Hence, it is not surprising that less than half of District residents make use of local retail businesses of any type, with over half making regular use of Hamilton-based businesses — and up to 75% in specialist retail areas like fashion/shoes and furniture/appliances. Future population growth expectations do not change the prevailing retail network and likely future strategy. Strongest growth (around 70% of all expected growth) is anticipated in those areas immediately nearby to the City (western, eastern and northern city fringes including Ngaruawahia). What will change a portion of retail demand is Council’s general intention to encourage more rural residential development to occur in and around community centres rather than just spread across the land in lifestyle blocks. The effect of this will be the creation of a community nucleus around which some local shopping can be focused, and this can be applied to several locations around the District. Overall, the consequences of these features to future demand for new retailing is :

- some new demand for “convenience-type shopping” • in the town centres • and in community centres - but predominantly the continuation of a shopping pattern making

strong use of Hamilton and Auckland retail businesses. Specifically … • The existing Ngaruawahia town centre will continue to be influenced by close proximity to the City, especially to The Base which is only about a 10-minute drive “in traffic”. Essentially, this town centre functions as a “suburban centre” with a high emphasise on local everyday goods and services eg. existing businesses include 2 x small supermarkets, dairies, butcher, chemist, stationery, video, retail liquor, bank, medical centre, and community facilities like library and meeting rooms.



The supporting trade catchment to Ngaruawahia town centre includes the immediate township population which is around 5,300 people, plus nearby areas like Horotiu and Kainui rural areas which add another 2,000 people. So, overall, the support catchment is small, around 7,500 people. Looking forward, around a 50% increase in the Ngaruawahia population base is projected over the next 20 years which will add some “new retail demand”. On the other hand, The Base and other Te Rapa retailing is only about a 10 minute drive “down the road”, and this retail focal-point has potential for substantial expansion still to come not only in size but in the range of retailing available. Also noteworthy, the existing Ngaruawahia town centre business area has some capacity for accommodating new development within existing land areas, and also many existing businesses have a capacity for expanded trade within the existing business premises. Given these market features:

• the key focus for retail businesses here will most likely be a continuation of the existing emphasis on “local and convenience businesses” serving the immediate trade catchment;

• demand for new development will emerge as new population growth actually emerges, a factor that can be monitored by Council;

• given growth capacities within existing land areas and existing businesses, there looks to be limited need for expanding the current town centre commercial land area … rather, the focus for future development will likely be on accommodating changes and re-development in specific businesses and properties within the established town centre precinct.

• In Huntly, residents are far more self-sufficient in using local businesses for a majority of retail needs - only the specialist areas of clothing, furniture/appliances, and car purchases require significant out-of-town shopping, and Hamilton is the first preference for these items. Longer-term population projections over the next 20 years suggests modest growth around the township and in nearby rural areas. Overall market size today is small, around 7,000 in the township plus 2,000 in nearby rural areas, plus growth of perhaps +1000 over the next 20 years. Projected the light long-term growth will do little to alter the scale and function of Huntly retail. This scale is capable of supporting local shopping but little specialty or large-format shopping. Accordingly, there is no significant catalyst that can be identified to push Huntly retailing into a new dimension of “demand” for additional retailing. So, looking forward, these market features suggest continuation of the existing locally-focused retail business base. Commercial justification for more retailing like specialist or large-format activities is unlikely given the small size of the local market, slow growth in the local population, and relatively easy access to alternative shopping options predominantly in Hamilton. For demand that does emerge, the core town centre is very restricted in land area, but the southern fringe area around Countdown supermarket has some development potential. Hence, there is no apparent need to identify alternative land areas for longer-term retail usage.



• Te Kauwhata and Meremere / Hampton Downs is one area where new growth can be expected to create some demand for new retailing. Around Te Kauwhata and looking forward 20 years, future population projections suggest growth of +2300, representing growth of almost +200% over current levels, and taking the local population up to around 3,500. This scale of growth will place some demand on new retailing over time, predominantly for local convenience activities. As elsewhere, retail growth will respond to actual population growth occurring. Fortunately, the existing Te Kauwhata commercial centre has land capacity to accommodate a considerable amount of new development, so there is no likely need to expand the commercial land base to the centre but rather a need to progressively improve the integration of the centre as new development and business expansion emerges. In Hampton Downs/Meremere, today there is no defined community centre; there are no shops or services. This is not surprising given there are only around 480 residents in the general area. But this area is also subject to change. A new women’s prison has recently opened in the area, with a new workforce is expected to progressively move into the area. Also, a new international raceway circuit is being built, along with an associated business centre intended to emphasise vehicle and racing oriented businesses. New population growth in this area is projected at +200 over the next 20 years, plus possibly some influence from businesses in the raceway project. Collectively, these new activities will possibly create limited support for a small local retail centre in the future, but the key emphasise will be “local” retailing, and the scale will be highly dependant on what actually occurs in the area over time. For other shopping needs besides “local goods and services”, travel distances are similar whether heading south to Hamilton (50kms to the Hamilton CBD) or north to Auckland (35kms to Pukekohe; 40kms to Papakura; 50kms to Manukau City Centre). • Small Community Centres like Maramarua, Taupiri, Te Kowhai, Whatawhata each have various levels of new population growth expected in nearby areas. But common to all is that existing populations are small and new growth is also small in actual numbers. So, looking into the future, even though “good growth” may be expected this will be combined with a relatively small and dispersed population base. These features suggest there is some potential for expansion of a few more “small local shops” clustered around the existing community centres. But the relatively close proximity to shops and services in Hamilton (or Auckland in the case of Maramarua), and the strong employment relationship with Hamilton (or Auckland), will maintain a limit on new retail development—demand that does emerge will have a strong “local business focus”. • Raglan centre, today, provides very local convenience shopping only, and on a limited scale. Given the nature of the area – remote, with a limited and dispersed population, and with reasonable future growth projected but still small in absolute numbers (around+1000 over 20 years) – there is a limited likelihood for any significant change to the existing retail offer and shopping patterns. Hamilton, as the closest shopping alternative, is going to remain the primary source for most goods and services. Council ideas for greater development of a tourist centre in Raglan could introduce a degree of niche retail which can be responded to as details emerge, but for the time being this will have little influence on demand for “usual retailing”.



• Community Centres in the east and southeast, like Gordonton and Tamahere, will be surrounded by good levels of future growth. New population growth in the general area is expected to be significant, worth 33% of the District’s total growth expectations over the next 20 years. However, at the big-picture level this growth will do little to change the prevailing shopping patterns which show a very high level of shopping at City businesses, and secondarily in Cambridge town centre particularly by residents in the south. The population base is still “light” in absolute numbers, will continue to be highly dispersed, and lifestyle block residents can be expected to continue to emphasise an employment base in the City (eg. around 45% of current working adults travel into the City for work). These features reduce the practical demand/justification for any major development of new retailing in the area, but there will be some local retailing demand. Today, Gordonton is a small community with a handful of shops including cafes, arts and gifts. But there are notable absences in usual everyday activities like dairy/superette, chemist, petrol. Alternatively, it is about 8kms travel into the Thomas Road suburban centre at the northeast fringe of the City, with 2 x supermarkets and many other goods and services The absence of some key everyday retailers is an indication that, today, the economic support for a wider range of shops does not exist at Gordonton, particularly given alternative shopping within a reasonable travel distance to Thomas Road shops. So, looking forward at Gordonton, there should be potential for some additional small shops. However, the likely scale will be small –estimated at +/- 1000m2GFA, certainly “local” in trading patterns, and will respond to actual population growth progressively occurring in the area. More likely, the Gordonton area has a future as a niche retail focal point for cafes/arts/crafts/garden-centres/hand-made furniture and furnishings, etc. This type of activity is distinctly non-mainstream retail, and can be provided for and encouraged by Council as an “addition” to the limited demand for mainstream retail as explained above. The Tamahere–Matangi area is at the very southeast edge of Waikato District, generally positioned between Hamilton City to the north and Cambridge township to the south. Today there are no notable retail facilities in this area. On the other hand, the area does have a reasonable population base of around 6,600 today, although it is dispersed across a lifestyle-block living area, so there is no established focal point today. Looking forward, growth of around +2000 is projected over the next 20 years. Respecting the population base in this area, Council has expressed some interest for establishing some form of local retail centre somewhere in this area. A logical position would be somewhere along the State Hwy 1 route which is semi-central to this area. The scale of any new centre here will be distinctly “local”, given existing shopping alternatives relatively nearby either to the south in Cambridge or to the north in Hamilton. Somewhat comparable, Waipa District has proposed a new local retail centre of around 4,800m2 near the airport including a small supermarket up to 1000m2 However, the airport retail centre also has expectations to serve an expanding business/industrial base at the airport plus an expanding air-traffic passenger base using the airport. Neither of these additional customer generators will apply at Tamahere, so the scale of demand for a local centre can be expected to be smaller. Our expectation is for a local centre around +/- 3,000m2 GFA, needing 1 – 1.5ha of land.



Overall, some change can be expected to retail centres around the District, but it will be of a relatively small scale. Because of the dispersed nature of the population across predominantly rural areas, and because the majority of the population base falls within close proximity to Hamilton, and also because a similar population distribution is expected from future growth, the influence of Hamilton retail businesses will continue to be a dominant theme in satisfying many retail needs with local centres maintaining an “everyday goods and services” focus. Table I, following, outlines the potential growth in new retail floorspace around Waikato District. MAP 15, following, shows the travel times between main centres in the District and Hamilton City.

TABLE I

FUTURE RETAIL DEVELOPMENT OPTIONS •• WAIKATO DISTRICT ••

Estimated Expansion / m2GFA

1. Ngaruawahia town centre Some expansion /redevelopment within the existing commercial centre; timing will respond to new growth -- estimate +1,000m2 over time

2. Huntly town centre Some limited expansion /redevelopment within the existing commercial centre; timing will respond to new growth

-- estimate +1,000m2 over time

3. TeKauwhata / Expansion within the existing TeKauwhata HamptonDowns-Meremere commercial centre for “local goods/services” -- estimate +1,000m2 over time

Possible new “very local“ centre to serve emerging community around Meremere raceway -- maybe 500-1000m2 range

4. Whatwhata / TeKowhai / Taupiri Some expansion of a few new “local shops” Maramarua / Gordonton /Raglan within / adjacent existing community centres --estimate +500 to 1000m2 per centre,

--some specialist “tourist centre” functions may emerge in some centres

5. Tamahere New community centre to be established – location to be determined; -- function to be distinctly “local”, given existing shopping alternatives relatively nearby; scale estimate at 3000m2 GFA / 1-1.5ha of land

Total : say, +10-12,000m2 GFA



MAP 15



Waipa District

Waipa District falls to the south of the City. By comparison with Waikato District, Waipa covers about half the land area but has a similar population base. The two main town centres, Cambridge and Te Awamutu, are of similar size around 13,000 people each which means in terms of population distribution that around 60% of the District population live in the two townships, with the remaining 40% in rural areas.

The rural population can be generally allocated as follows —11% north of Te Awamutu, 8% south and 8% around Te Awamutu, and 13% around Cambridge. The 11% living north of Te Awamutu is noteworthy because in this area there is a higher level of workers commuting into Hamilton (40% working in Hamilton), and there is an above-average usage of Hamilton businesses for all types of retail. By comparison, the household shopping survey showed that Cambridge and Te Awamutu are “distinct” trade catchments in that, firstly, residents make good use of local town centre shops for many retail items, and secondly, there is very limited cross-shopping between the town centres for any type of retail activities whereas Hamilton is the preferred “2nd choice” for residents in both town centres. Future population growth projections identify a general split around 50/50 between expected new growth in the town centres vs. rural areas, with greatest rural growth around Cambridge and in the northern rural sector (between Te Awamutu and Hamilton City’s southern boundary), and least rural growth in the southern sector which is furthest removed from the influence of Hamilton “lifestyle” dwellers. Overall, these features suggest future retail planning that supports the existing functions of each town centre--that is, provides for growth in these areas, and also recognises that some shopping is going to continue to flow into Hamilton for specialty retailing because local markets are too small to sustain many of these business-types. Specifically, area by area … • The existing Cambridge town centre will continue to be an important shopping destination for those within the Cambridge trade catchment. Cambridge is approximately a 25-30 minute drive from the Hamilton CBD, and worker commuting is lower than in other areas (around 19% work in Hamilton). So, Cambridge looks to have a lower level of “alternative shopping influences”, while being very conveniently located to people within the Cambridge trade catchment. Hence, the high levels of local shopping, as indicated by the household survey, are understandable. The size of the Cambridge retail offer has been estimated at around 15,000m2 GFA, of which around 75% (11,000m2) is large-format eg. 2 x supermarkets, Warehouse, Briscoes, and a few others. Consequently, local shopping is strong across a broad range of items except in specialist areas like clothing shoes and furniture/ appliances where Hamilton is the preferred shopping destination. Earlier investigations completed by Waipa District Council during 2006 helped establish a strategy for commercial land around the District. The conclusions identified a need for additional retail space of around +10,000m2GFA in Cambridge town centre. In Cambridge, investigations are still underway into exactly where this additional space might be best located, given that the existing town centre commercial precinct is strongly confined with no easy options for expansion immediately adjacent to existing retail areas.



On the other hand, an interesting finding from the household shopping survey identified that many local residents see no need for additional retailing. Question #40 asked : “Do you think more shops are needed near your home?” The results show some strong local feelings against the need for additional shopping. Agree Disagree Neutral Cambridge 29% 55% 16% Waipa District 17% 48% 35% Waikato District 37% 36% 27% Hamilton City 28% 37% 35%

We have not reassessed the specific demand for additional retailing in Cambridge, but rely on previous findings from the District Council’s earlier work suggesting around +10,000m2. That is a 66% increase over current levels (at around 15,000m2), and will undoubtedly help provide for some additional large retailers which tend to comprise a significant part of new retail development. But we also note that, in terms of business economics, many larger retail businesses require a population base of around 40-50,000 people with associated spending capacities to support such a store. The Cambridge trade catchment is significantly less than this with around 19,000 people today : 13,000 in the township, plus 6,000 in surrounding rural areas. Another 7-8,000 future growth is projected over the next 20-years. So all up, say a future catchment of 26,000 people – this is obviously well short of the minimum catchment size desired by many large retail businesses. Also recall that there is limited cross-shopping between Cambridge residents going to Te Awamutu, or vice versa. Rather, the preferred alternative shopping venue in both cases is Hamilton City, particularly the CBD. The significance of this is that, into the foreseeable future, the current balance of retail usage between local Cambridge shops vs. Hamilton businesses is likely to continue – Cambridge being ”the local” for a wide range of retail needs, and Hamilton being the special destination shopping venue for specialty items. • The existing Te Awamutu town centre is important to the “western half” of the District. It is quite similar to the Cambridge situation in size, estimated at around 15,300m2GFA; and also in retail offer, including 2 x supermarkets, Warehouse, 2 x larger hardware/DIY stores, branded fast-food restaurants, and a wide range of small shops and commercial services. The household shopping survey data did not work out as well as we might have liked in this local area, in that survey numbers were low. Hence, we cannot confirm exact shopping patterns, but the minimum data available suggests strong similarities to Cambridge – eg. strong use of the Te Awamutu town centre for a wide range of retailing especially “everyday” things, with use of Hamilton for specialist items.

We have not reassessed the specific demand for additional retailing in Te Awamutu, but rely on previous findings from the District Council’s earlier work suggesting around +14,000m2. That is close to a 100% increase over current levels (at around 15,000m2), and will undoubtedly help provide for some additional large retailers which tend to comprise a significant part of new retail development.



Presently, a rezoning exercise is in progress which would establish a 6ha land block on the edge of the Te Awamutu commercial precinct for new retail development. Around 10,000m2GFA is proposed, of which 6,000m2 is for a new Pak’nSave supermarket and the remainder for another 10 shops or so. At least in the short term, it is difficult to foresee the need for any additional retail expansion of any substantial size beyond what has been already anticipated. As already noted, in terms of business economics, many larger retail businesses require a population base of around 40-50,000 people with associated spending capacities to support such a store. The Te Awamutu trade catchment is significantly less than this with around 20,000 people today : 13,000 in the township, plus 6,800 in surrounding rural areas south and west. Another 5-6,000 future growth is projected over the next 20-years. So all up, say a future catchment of 26,000 people – again, this is obviously well short of the minimum catchment size desired by many large retail businesses. Also, recall that there is limited cross-shopping between Te Awamutu residents going to Cambridge, or vice versa. Rather, the preferred alternative shopping venue in both cases is Hamilton City, particularly the CBD. Overall, the significance of these features are that, into the foreseeable future, the current balance of retail usage between local Te Awamutu shops vs. Hamilton businesses is likely to continue – Te Awamutu being ”the local” for a wide range of retail needs, and Hamilton being the special destination shopping venue for specialised items including most large-format retail businesses.

• Other small centres -- There are only two other small centres, Pirongia and Ohaupo. Both are extremely local in their shopping offer, and there are no apparent reasons for why this might significantly change in the future. There is potential that a another few shops could emerge in these centres, but the scale is will not be large and such development should be capable of being handled within the existing community centre commercial focal points. • Waikato Regional Airport, new retailing – A proposed plan change has been recently considered that would expand the industrial/business base around the airport, and introduce a local retail centre up to 4,800m2GFA including a small supermarket of up to 1000m2 GFA . The stated purpose of this centre is to provide for everyday goods to surrounding local rural areas and also to the expanding workforce and passenger traffic expected from expansion of the airport facility and business centre. We know from the household shopping survey data that, in the northern rural sector, currently “everyday goods” are sourced from Hamilton (either the CBD or nearest suburban centres like Glenview or Dinsdale) and secondarily from Te Awamutu, while specialist items are sourced from Hamilton (especially the CBD). The commercial land strategy prepared by Waipa District (2006) considered in a preliminary way the potential for a retail centre at the airport, suggesting that this location may be a convenient midway point to attract custom from both Te Awamutu and Cambridge catchments, especially for large-format retail. However, the report also flagged the issue of potential adverse effects on the Hamilton CBD. No detailed work was done beyond this broad overview.



During the course of early consultation about the Airport plan change, a wider range of retail was considered. The initial market assessment behind the Airport project suggested support for a large-format retail centre of around 10,000m2GFA if a large trade catchment could be achieved including the Cambridge catchment, a wide rural catchment, and the southern portion of Hamilton City covering some 55,000 city residents. The inclusion of 55,000 city residents was, in fact, 70% of the total proposed trade catchment population base, which raised obvious questions about the need for such a centre to serve so many city residents and about significant adverse effects on the City CBD as the primary retail centre for the southern half of the City. Ultimately, a larger retail centre was abandoned and a smaller local centre accepted as appropriate to the needs of the area. Overall, around Waipa District, future changes in retail facilities look to be suitably anticipated by provisions already planned for or in the process of being planned. The distinct features of two main town centres of similar size accounting for 60% of the District’s population, and relatively close proximity to the Hamilton City retail base primarily for specialist goods, will continue to be dominant factors influencing where and how much new retail occurs. Table J, outlines the potential growth in new retail floorspace around Waikato District. MAP 15, shows the travel times between main centres in the District and Hamilton. It also shows the position of Waikato Airport as a new “local centre” relative to other existing centres.

TABLE J

FUTURE RETAIL DEVELOPMENT OPTIONS •• WAIPA DISTRICT ••

Estimated Expansion / m2GFA

1. Te Awamutu Town Centre +14,000m2 - as anticipated by urban growth strategy; - 10,000m2 proposal under consideration - additional floorspace to be provided as required

2. Cambridge Town Centre - no specific development is known, but +10,000m2 Council’s urban growth strategy has identified a need for around +10,000m2; specific site details are being investigated

3. Airport, “local” convenience centre + 4,800m2

Total : +28,800m2 GFA



Morrinsville Area Morrinsville falls to the east of the City and also east of the Waikato District “eastern sector”. The study area comprises only Morrinsville township and nearby rural sector. Within this context, the town centre is the only retail focal point, Noteworthy about the Morrinsville town centre is that it is the main business/retail centre for the “northern half” of Matamata-Piako District – a catchment with about 20,000 people. Other noteworthy features include :

• Similar travel distance from Morrinsville to Hamilton City as compared to other main townships in the Regional Study Area like Cambridge, Te Awamutu and Huntly.

• Future population growth is expected to be small, both within Morrinsville and

also within the wider catchment served by Morrinsville businesses, so this will not be a significant driver of new retail demand

• There is a high level of customer usage of “local businesses” for many types of

retail … but specialist goods are sourced elsewhere, predominantly in Hamilton, for

activities like furniture/appliances and clothing/shoes … and this shopping pattern has similarities to results for Cambridge and Te

Awamutu townships. • In the household shopping survey, respondents were asked about what other

shopping might be required locally : 60% had no comment; of those commenting, most specifically mentioned “more fashion/clothing”

• Employment patterns (where people work) take only a minority of residents to

areas outside the Morrinsville study area, which minimises the influence of misc. retail spending occurring outside the local area.

Having regard to these features, the future picture for Morrinsville retail suggests pretty much a continuation of current shopping patterns. The town centre has a wide range of the “usual” retail businesses, including 2 x supermarkets, Warehouse, around 10 x clothing stores, and numerous other convenience activities which provide local residents with a high degree of “self-sufficiency” and limited need to source goods outside the local area – when this occurs, it is confined primarily to the specialty areas like clothing/shoes, furniture, and vehicles. New population growth is not expected to be large, neither in Morrinsville nor in the wider catchment served by Morrsinville businesses. And the existing town centre precinct (land area) has some capacity for new development as demand arises, meaning there is little need to specifically provide for future retail development outside of the established core area. Overall, there is likely to be some demand for new retail space over the next 20 years, but the scale of this demand is not expected to be large. Accordingly, future demand looks capable of being met within land currently contained in the established town centre precinct, primarily achieved through re-development of existing premises.



Some Broad Retail Development Standards – Especially in Rural Districts

Rural districts, like Waikato and Waipa Districts and the Morrinsville Area, are not the types of areas where self-sufficiency in retailing can be achieved. In simplicity, this is a function of market size / spending capacity vs. minimum business thresholds to operate a viable business. So, what types of shops locate in what types of locations has nothing to do with whether or not local residents like to shop or not (most people like to shop on a regular basis, whether rural or urban residents) . . . but, on how many people are accessible to location “x” to provide as adequate spending base able to support a store. In other words, what is the trade catchment potential for location “x” ? eg. 5,000 people will support a certain level of retail (eg. Huntly, Ngaruawahia); 15,000 people will support a greater level of retail (eg. Cambridge, Te Awamutu); and 100,000 will support a much greater level (eg. Hamilton CBD, The Base, Chartwell). For comparison purposes, here are some broad guidelines for assessing the scale of new retail development that may be suitable in a given location. • Dairy / “corner shops” eg. sometimes freestanding, but usually within a group of “corner shops” up to 6 shops / usually less than 1,000m2GFA / 0.25ha land

- on average, one dairy per 2,500 – 3000 people - for example, a study in Hamilton City identified 1 dairy : 2,600 people - a study in Papakura District identified 1 dairy : 2,800 people.

• Neighbourhood Shops eg. around 6 – 10 “local” shops / 2,500m2GFA / 1ha of land

- for comparison, the Flagstaff Centre in Rototuna, northeast Hamilton City, is about this scale;

- this is a “local neighbourhoods centre”, serving a clearly defined local catchment that is semi-remote from the direct influence of other centres although it is surrounded by larger centres;

- the surrounding population base was around 3,000 when the centre first opened, today the population is around 4,000 people

- the nature of businesses in the centre is distinctly “local” - eg. superette, liquor, chemist, bakery, café, takeaways, video, hairdresser, real estate, optometrist, police, fitness centre

- for comparison, Te Kauwhata in Waikato District would be about this scale. • Supermarket eg. the most common type of “large-format store” / 3-4,000m2GFA is a common store size, sometimes larger for major discount store-types like Pak’nSave and Countdown / around 1 – 1.5ha land just for a supermarket.

- broadly, supermarkets require around 10,000 people in a local catchment plus some sales potential from a wider area;

- for comparison, in the Rototuna area of northeast Hamilton City, are two new supermarkets at Thomas Road; the current population in the core catchment is 15,000 people plus future growth potential of another 15,000 up to around 30,000;

- as another comparison, in a small town setting like Huntly is a new Countdown store; Huntly township has a population of 6,100 plus around 3,000 from nearby rural areas; notably, this is the only supermarket in the area, so it can operate in a smaller market / population base than might be more usual.



• Department Stores eg. Warehouse, Briscoes, Farmers, K-Mart, are comparable to being a “supermarket of general merchandise”; store location requirements vary by individual operator – Warehouse is most common in NZ, and its requirements could be considered “broadly similar” to a supermarket eg. 1ha of land for 3 – 4000m2GFA in a small catchment, but up to 5 – 10,000m2GFA in strategic locations eg.The Base.

- broadly, department store activities require around a minimum of 10,000 people within a catchment but usually more

- for comparison, smallest markets would be represented by the likes of Morrinsville or Matamata, with township populations of around 6,000 plus a surrounding rural support base of 4-5,000 people;

- alternatively, in larger townships are larger stores as represented by Cambridge or Te Awamutu with 13,000 people in the township plus a wider rural support population;

- or in a city setting, a “suburban” store like Hillcrest in Hamilton has a catchment population around 35,000; or a large store like in a city-wide trading position such as in the CBD or The Base in Hamilton has a supporting catchment of 100,000 people or more.

• Large-format retailing eg.mass-merchandising by large scale retailers, in planning terms operating in stores larger than 400-500m2GFA; often located within large-format centres like The Base, Hamilton, but also in freestanding positions or store clusters around a city centre eg.Hamilton CBD fringe.

- broadly, at least 40-50,000 population, usually larger, is required to support such business activities;

- economic success is based on high volume / low margins, - a strategic location with access to a large population is essential to provide

business access to a high customer count; - LFR often involves business activities like furniture, appliances,

computer/electronics, a wide range of home improvement and home furnishing-type activities (carpets and flooring, lighting, door knobs and hardware, plumbing fixtures), and sometimes name-brand fashion houses like Hallensteins and Pumpkin Patch and a few others.

• Specialty Shops eg. fashion / shoes / accessories / homewares and home design, etc.

- traditionally, this is “comparison shopping “ in a “main street” shopping environment; today, this is more commonly found in “the mall”;

- these shops depend on “comparison / cross-shopping” - they are not usually found in one-off stand-alone positions, nor in small

corner-shop positions, and are not very common in suburban centres - preferred positions are town-centre main streets and shopping malls, with

access to high pedestrian traffic and proximity to other similar stores to enable “cross-shopping/comparison shopping”.

- in the context of Waikato and Hamilton areas, small towns like Huntly and Ngaruawahia have few specialty shops due to small trade catchments; larger townships like Cambridge and Te Awamutu have a reasonable range of such businesses but usually “private owner” stores and few national brands; national brands and boutique brands are found in Hamilton CBD and Chartwell Mall.

These broad guidelines have influenced our assessment for “demand” of new retail facilities around Waikato and Waipa and Morrinsville areas, particularly when combined with specific characteristics about local catchments.



Assessment of Overall “Demand” Across the Region

Our investigation into potential new retail development around the Region has identified a future development capacity from “known” projects and likely changes to commercial centres of :

+ 163,000m2 GFA : Hamilton City + ?? : Unknown within Hamilton, particularly in the CBD Fringe-commercial services zone, and also in the Industrial Zone around Te Rapa + 28,800m2 GFA : Waipa District + 10-12,000m2 GFA : Waikato District + ?? m2 GFA : Morrinsville Area

say, + 204,000m2 GFA : “known” new retail development through identification of projects/retail areas with potential capacities for growth

On the other hand, potential future floorspace demand has been assessed from our modelling exercise at between +115,000m2/GFA to +319,000m2GFA over the next 20 years, with : • Option (i) = +115,000m2 based on population growth only; • Option (ii) = +240,000m2 based on population growth and +1% p.a income/spending growth • Option (iii) = +319,000m2 based on population growth and +1% p.a income/spending growth and inbound leakage influences. Comparing the “Known” retail development capacity of around 204,000m2 with assessed retail demand from the modelling exercise identifies that : • Option (i) : all of the expected demand can be handled from “known” capacity ( +115,000m2 assessed demand vs 204,000m2 “known” capacity) • Option (ii) : almost all of the expected demand can be handled from “known” capacity ( +240,000m2 assessed demand vs 204,000m2 “known” capacity) … and particularly if regard is given to potential capacity for some demand being taken up by latent development capacity within existing retail space, and by the potential for improving productivity levels within existing retail space (as discussed in Part 4 above), then all of the expected demand under Option (ii) can be considered handled through “known” capacity. • while under Option (iii) : the need for additional retail space can be identified at around +115,000m2GFA more floorspace ( +319,000m2 assessed demand vs 204,000m2 “known” capacity) … but this demand is also subject to consideration about improving productivity trends and consequential reductions in overall floorspace demand, which means the real need for new retail floorspace could be less than projected levels.



The key result from the demand modelling work vs. the investigations into potential development capacities around the Study Area is that, to a very large degree, most future demand (at least over the next 20 years) can be met from existing commercial centres or known/planned projects. In planning terms, we believe this means that a strong emphasise on retaining a development focus around existing centres can be maintained and, other than for identified needs to provide new community or suburban-scale shopping in new growth areas, there is no need to provide for any major new retail area. Option (iii) is the only scenario that suggests the demand for new retail floorspace beyond what can be identified as “known”. However, we do not believe it is imperative to account for all of the projected future floorspace need by way of specific land or development project availability. There are several reasons for this.

1. Today, the state of the national and world economy does not favour optimistic thinking about retailing. The retail industry has experienced excellent growth for several years, in part based on the creation of excessive credit which is a factor that is now being scaled back. However, over the past 12 months retail sales have declined rather than grown. It is difficult to predict how long this difficult economic picture will continue, but even when things improve it is broadly expected that the degree of growth in retail that may resume will be at a more modest level than previously experienced, meaning slower demand for new retail floorspace.

2. Another key reason for taking this position is that it is incorrect to assume that the existing retail business base is operating at maximum efficiencies and, thus, any increase in sales demand automatically requires additional floorspace. In fact, our discussions with retailers would suggest the opposite, that there is general capacity to accommodate a level of sales growth within existing floorspace constraints.

The example has been discussed earlier in this report, where if a 10% increase in retail sales efficiency took place -- that is, if higher productivity in sales/per m2 is achieved beyond the effect of inflation alone, then this would reduce the projected future demand for new retail space by (-50,000 to -70,000m2GFA). This is a significant reduction in overall demand.

3. There is an “unknown” component for new retail development within the Hamilton CBD fringe and also within the Hamilton industrial zone especially in Te Rapa. Any new retail projects in these areas, either as freestanding stores or as centres, could easily add several thousand m2GFA into the retail mix.



4. Into the near future anyway, a significant factor that could influence future

sales is inflation. There is the likelihood of above-average price rises for base products like food and other “essentials” due to high costs for petrol and corn-based commodities. These two basic commodities are used widely in the production of many “everyday” goods. The growth in retail sales arising from above-average price increases in the cost of goods, compared to more modest increases in actual product volume sold, will not sustain any significant demand for additional retail floorspace.

5. Additionally, there are uncertainties within any methodology used to model and project future retail sales and consequential retail floorspace demand. This is particularly so the further out in time that projections are taken – a longer timeframe equals a lower level of reliability.

In particular, we note that the future population projections adopted for this project are at the top-end of the growth range. Obviously, if these growth targets are not achieved the demand for additional retail floorspace will reduce.

For the above reasons, we have decided to leave any residual demand for future growth in floorspace (above and beyond “known” capacities”) unallocated at this time. The current economic climate does not support the need for optimistic planning scenarios, but rather some degree of conservatism. Future retail demand can and will undoubtedly be reviewed again at a later date. In the meantime, at least for the next several years, there is adequate known capacity for new retail development around the Region, which in turn enables time to be taken before any other decisions are made on how much additional retail land should be provided, and where. Thus, an overall Regional Retail Strategy is suggested as set out in Table K, following.



TABLE K

REGIONAL RETAIL STRATEGY

Having regard to all the above findings, the “retail strategy” for the region should reflect :

(i) Around Hamilton City : • Maintaining an emphasis on existing commercial centres. • Providing for new retailing in new growth cells through local town centre / suburban centres / neighbourhood centres as appropriate eg. in Rototuna, Rotokauri, Peacockes, Ruakura growth cells. • Given the high level of existing development capacity within established commercial centres, there is no need at this time to make specific planning provision for any major new retail centre anywhere around the City beyond the provision for suburban-scale retailing in new growth cells. (ii) Around Waikato District : • The distribution of the population around the District, today and into the foreseeable future, will continue to emphasise areas closeby to the Hamilton City fringe; this directly affect a majority of the District’s population. • On the one hand, Council’s intentions to emphasise rural residential growth into community centres will help create nucleus community centres that can support an improved offer in convenience-retail. This retail growth should be able to be accommodated adjacent to established centres, with perhaps the introduction of a new community centre in the southeast area around Tamahere, and a very local centre in the Meremere/Hampton Downs area. • On the other hand, population distribution is a key feature in considering new retail demand; current and expected future distribution vs. access to existing retail centres especially in Hamilton City minimises the potential for any significant expansion to retailing in existing town centres particularly in areas of specialist and large-format retail. None-the-less, some growth in retail demand can be expected, and the challenge will be to foster improved centre integration through new development that does emerge. • Overall, some future retail demand can be expected to be taken up locally, particularly in the convenience-everyday range of goods and services, and this growth should emphasise development within established town centres and local community centres. However, a fair proportion of shopping by Waikato residents can be expected to continue flowing into Hamilton (or Auckland for northern sector residents).



TABLE K (cont.)

REGIONAL RETAIL STRATEGY (iii) Around Waipa District : • The two main townships of Te Awamutu and Cambridge house 60% of the District’s population, and future growth is expected to continue this trend. In terms of shopping, the two town centres are first preference shopping destinations for 85% of the District’s population. Travel distances help maintain the independence of these two town centres from each other as well as from any stronger Hamilton influence. • Future growth demands will require some provision for retail expansion in the town centres, identified at around+10,000m2GFA in Cambridge town centre and +14,000m2GFA in Te Awamutu town centre through the District’s urban growth strategy. This continues to support the function of these centres as important town centres, effectively with one centre serving the eastern half of the District and the other serving the western half. • In the northern rural sector between Te Awamutu and Hamilton City, there is a strong reliance on Hamilton businesses for most retail needs including local everyday items. This is also an important residential growth sector. The addition of a new local shopping centre, around 4,800m2GFA, is part of a Proposed Plan Change at the Airport to provide for “local everyday” retailing. This is a reasonable addition to the retail network relative to new population growth needs and also relative to making use of an established activity focal point that expects to see significant expansion as a business employment zone and as an air passenger transportation hub. (iv) Around Morrinsville Area : • Morrinsville town centre is the only retail focal point in this study area. Businesses here service the northern half of the Matamata-Piako District which is to the east and south of town, with little influence going westward towards Hamilton. • Morrinsville residents make a high level of use of local shops; limited out-of- area shopping occurs in Hamilton, and when this does occur it is mostly for specialist goods. • Future population growth expectations are for modest growth both in Morrinsville and through its wider catchment. • Consequently, there is little change expected in terms of demand for new retail. Whatever demand does arise looks capable of being accommodated within the established town centre precinct and existing zoning controls. •••• •••• •••• ••••



APPENDIX I

Retail Survey Around Hamilton City CBD, Shop-type and Shop-size

. . . and pg.2 /

PART A : CBD Core & CBD Fringe (excluding the major shopping malls CentrePlace, Downtown Plaza, and K- Mart Plaza)

GFA 22324 595 1120 1144 1125 13573 19,250 5065 6140 8911 3945 5812 2980 240

<50m2 0 1 0 0 3 4 0 0 0 0 0 0 0 0

50-100m2 0 2 0 0 3 12 0 0 0 0 0 4 3 0

100-200m2 3 1 0 1 1 25 0 0 0 5 6 10 3 0

200-300m2 0 1 1 0 3 15 0 0 0 2 2 7 0 1

300-400m2 0 0 1 0 0 5 0 3 0 0 3 4 1 0

400-1000m2 0 0 1 0 0 6 0 5 4 4 3 2 0 0

1000m2+ 5 0 0 1 0 1 3 3 1 3 0 0 1 0

No. of shops 8 5 3 2 10 68 3 11 5 14 14 27 8 1

TOTAL GFA (m2) 195,570 44945 150,625 Core Retail m2 GFA

TOTAL NO. SHOPS 366 less Auto 34

& Accom.

PART B : The major shopping malls of Centre Place, Downtown Plaza, and K-Mart Plaza (Hamilton Central)

GFA

<50m2 0 0 0 0 18 3 0 0 0 1 0 6 0 0

50-100m2 0 0 0 0 6 0 0 0 0 1 0 12 4 1

100-200m2 0 0 0 0 0 0 0 0 0 3 0 20 1 0

200-300m2 0 0 0 0 1 0 0 0 0 2 1 9 1 1

300-400m2 0 0 0 0 0 0 0 0 0 0 1 3 0 1

400-1000m2 0 0 0 0 0 0 0 0 0 1 0 1 0 0

1000m2+ 0 0 0 0 0 0 1 0 0 0 1 1 0 0

No. of shops 0 0 0 0 25 3 1 0 0 8 3 52 6 3

TOTAL GFA (m2) 28,403 0 28,403 Core Retail m2GFA

TOTAL NO. SHOPS 178 less Auto

& Accom.

• TOTAL CORE RETAIL : PART A 150,625 332

• TOTAL CORE RETAIL : PART B 28,403 178

• OVERALL TOTAL 179,028 /m2 GFA 510 No. of Shops

Recreational

Goods

Clothing

+ Soft

Goods

Footwear ChemistDepartment

Stores

Furniture+

FlooringHardware AppliancesLiquor

Other Food

RetailingTakeaways

Cafes +

Restaurants

Supermarket/

Dairy

Fresh

Produce

Other

PART A

GFA 3290 19194 25130 9592 2580 10995 16150 1270 2395 3050 0 9700 195,570

<50m2 0 0 0 0 0 1 0 0 0 0 1 10 3%

50-100m2 1 6 0 1 1 3 3 0 1 0 2 42 11%

100-200m2 1 9 0 7 0 12 1 0 1 1 4 91 25%

200-300m2 2 10 0 14 1 4 2 0 0 2 6 73 20%

300-400m2 2 3 0 3 1 2 2 2 0 2 2 36 10%

400-1000m2 3 11 3 8 1 8 4 1 3 3 7 77 21%

1000m2+ 0 4 5 0 1 2 6 0 0 0 1 37 10%

No. of shops 9 43 8 33 5 32 18 3 5 8 0 23 366 100%

PART B

GFA

<50m2 0 13 0 0 0 6 0 0 0 0 0 4 51 29%

50-100m2 6 6 0 0 0 7 0 0 0 0 0 14 57 32%

100-200m2 1 0 0 1 1 1 0 0 0 0 0 4 32 18%

200-300m2 1 0 0 0 0 1 0 0 0 0 0 3 20 11%

300-400m2 0 2 0 0 0 1 0 0 0 0 0 0 8 4%

400-1000m2 0 1 0 1 0 0 0 0 0 1 0 0 5 3%

1000m2+ 0 0 0 0 0 0 0 0 0 0 2 0 5 3%

No. of shops 8 22 0 2 1 16 0 0 0 1 2 25 178 100%

VacantTotal shop

no.% Total

Motor Vehicle

SalesPetrol

Motor

Vehicle

Services

BankAccomm-

odationBars + Clubs

Personal/

Household

Goods Hiring

Other

Personal

Services

Household

Services

Other

Goods

Retailing



. . . and pg.3 /

METHODOLOGY

Data for PART A : Quotable Value Ltd provided detailed commercial property rating assessments from the Hamilton City Council District Valuation Roll as at January 22, 2008.

Survey Area: The CBD Core and CBD Fringe areas including : those properties between Mill Street in the north and Bridge Street in the south;

and between the Waikato River in the east andTristram Street in the west, including a block between Clarence St and Pembroke St.

Methodology: Quotable Values data was used to determine the amount of retail floor space in and around the CBD.

• The data consisted of a list of sites and buildings within the study area with a commercial assessment.

• The raw data included information on each site's land area and gross building floor area.

• Limited information was included on the nature of businesses per each site, so further field work was necessary to expand on this.

• There were also other limitations with the base data, including multiple-level buildings and multiple-tenancies per site, also requiring site visits.

• So, many site visits were required to identify how many businesses operated on a site, which category they fitted into, and sometimes an estimate of shop size.

• For consistency purposes, the Statistics NZ -- ANZSIC code was used to categorise the businesses into retail activity groups.

• The final spreadsheet shows the gross building floor area (GFA) available, and also the number of different businesses, per each retail activity category.

Exclusions: This survey excludes the major shopping malls of Centre Place, Downtown Plaza, and K-Mart Plaza (Hamilton Central), which are covered by separate survey data.

Assumptions: In general the data provided by QV has split, where appropriate, 'parent' sites from 'child' sites, as commercial properties can be made up of a number

of rating components. However a few of the sites are still recorded as 1 site when in fact there are a number of retail outlets. This is due to

different types of lease and ownership situations etc. Site visits were undertaken to clarify this, and a consistent method was undertaken

so as to divide the site building floor area provided by QV, by the number of retail outlets and other commercial activities identified on the site.

Data for PART B : Kiwi Property Income Trust provided shop type and size breakdowns for Centre Place and Downtown Plaza;

on-site fieldwork identified shop type+size for K-Mart Plaza shops;

total m2GFA for these centres come from the Property Council of NZ "Shopping Centre Directory"

SUMMARY : "LARGE- FORMAT" SHOPS IN CBD

1000m2+ Store Size

5 2x Countdown, 1x Foodtown, 2x Pak n Save

1

1

4 Farmers, The Warehouse, Briscoes, K-Mart

3 Cemac Interiors, Mainly Chairs, and Freedom Furniture

1 Placemakers

3 Dick Smith Power House, Noel Leemings,other

1 RebelSport

1 EZI Buy

1 Number 1 Shoe Warehouse

0

0

4 Beds R U, Office Max, others

5 Ambassador Corporation ltd, Le Grand, Anglesea Motel, Novotel Tainui, Ventura Inn + Suites Hamilton

0

0

2 Imageland, Les Mills

6 Ingham Honda, Winger Subaru, Waikato Toyota, Mitsubishi Motors NZ ltd, Ebbett Holden x 2

0

Other 2 2x Movie Cinemas (Cultural+Recreational)

2

TOTAL 42

Footwear

Household Services

Bank

Vacant

Supermarket/ Dairy

Other Food Retailing

Cafes + Restaurants

Department Stores

Furniture + Flooring

Hardware

Appliances

Motor Vehicle Sales

Nature of Retail Activity

Other Personal Services

Other Goods Retailing

Recreational Goods

Accommodation

Bars + Clubs

Personal/Household Goods Hiring

Clothing + Soft Goods

Chemist



APPENDIX II

ESTIMATE OF EXISTING RETAIL FLOORSPACE IN m2/GFA AROUND WAIKATO STUDY REGION

• Hamilton City 150,600m2 GFA around the CBD Core + Fringe (excluding centres) 15,400m2 GFA in Centre Place (including cinemas) 4,900m2 GFA in Downtown Plaza 8,100m2 GFA in K-Mart Plaza 179,000m2 GFA + 35,700m2 GFA in The Base, today + 27,000m2 GFA in Westfield Chartwell+Lynden Court centres 241,700m2 GFA total in 3 x Major Centres (54% of Total Region m2/GFA) . . . PLUS . . . 40,000m2 GFA : general Te Rapa area (eg. New World, Church Street businesses opposite Supa Centre,

+ Supa Centa as it is today, Bunnings Te Rapa, others) 82,000m2 GFA : floorspace in other Suburban Centres (eg. Dinsdale, Enderley, Glenview, Hillcrest, Hamilton East, etc + --12 x centres in total, using 32.75ha of land x say, 25% bldg/land ratio) 18,000m2 GFA : floorspace in Neighbourhood Centres / “corner shops” (eg. 15 x centres in total, using 7.3ha of land x say, 25% bldg/land ratio) 381,700m2 GFA : TOTAL around Hamilton City (85% of Total Region m2/GFA) • Waikato District Council 10,000m2 GFA : Huntly town centre 5,000m2 GFA : Ngaruawahia town centre 5,000m2 GFA : other small centres, estimated • Waipa District Council 15,000m2 GFA : Cambridge town centre 15,000m2 GFA : Te Awamutu town centre 5,000m2 GFA : other small centres, estimated • Morrinsville Area 12,000m2 GFA : Morrinsville Town Centre •• 448,700m2 GFA : TOTAL REGION . . . Compares to the nine largest shopping centres in the country* (*according to Property Council of NZ data-2007) 1. Sylvia Park, Auckland = 65,200m2 GFA 2. Westfield Albany, Auckland = 56,900m2 GFA 3. Botany Town Centre, Auckland = 55,400m2 GFA 177,500m2GFA to here = slightly larger than CBD at 179,000m2 4. Westfield Queensgate, Lower Hutt = 50,100m2 GFA 5. Rotorua Central = 47,250m2 GFA 6. Westfield Riccarton Christchurch = 47,000m2 GFA 7. Coastlands, Kapiti Coast = 46,000m2 GFA 367,850m2 GFA to here = similar to Hamilton City Total 8. Westgate, Auckland = 45,200m2 GFA 9. Manukau Supa Centa, Auckland = 45,100m2 GFA 458,150m2 GFA to here = similar to Waikato Regional Total



APPENDIX III

FutureProof Exercise : Broad-Scale Regional Planning to 2041

Additional to the Regional Retail Study, the respective Waikato regional councils have collaborated on a FutureProof exercise projecting some broad-scale planning issues out for 35 years, for the years 2006 - 2041. Part of this exercise required some attempt at projecting long-term retail demand, in terms of m2 demand and location. The core Regional Retail Study has covered a 20-year planning timeframe 2006-2026. The following assessment looks at the potential retail demand issue for the period 2026 – 2041, that is +15years beyond the timeframe considered in the Retail Study. Therefore, the starting “base” for this assessment is 2026 and goes through to 2041. DISCLAIMER NOTE : The primary purpose of FutureProof Exercise was for developing a Regional Transport Model out to 2041. To do this required inputs to land use scenarios including retailing. The following assessment has regard to extending similar methodologies as used in the Regional Retail Study, but acknowledges that as with any projection method, a longer timeframe equals a lower level of reliability. It should be noted that the following information is specifically not intended for any use in district plan zoning or other more finer grained planning implementation. Part A : Alternatives for Assessing Future Retail Floorspace Demand Part B : Where to Provide for Future Retail Floorspace PART A : Alternatives for Assessing Future Retail Floorspace Demand

1. Fundamentally, there have been two key factors behind retail sales growth, and thus demand for new retail floorspace :

• population growth • real income growth

As a starting point in our assessment, we will assume: 1) that retail sales will increase at the same rate as the population grows (that is, there is no change in the “efficiency” of retailing as expressed in $ sales/m2 floorspace); 2) then consider any additional growth that may come from increases in real income growth.

Population Growth

2. The population growth projection base is as per the October 2008 data set prepared by University of Waikato-Population Studies : scenario PSC Medium EDA (same as applied in the Regional Retail Study).



This identifies growth of :

• Total Regional Base at 2026 = 318,673 ... plus growth 2026-2041 : • Hamilton City +38,194 • Waikato District +10,263 • Waipa District + 7,707 • Morrinsville area + 000 +56,164 growth / +17.6% over 15yrs, .... or a gross average of about +1.1%pa compounding • Total Regional Base at 2041 = 374,837

3. So, even if there was no growth from “real income growth”, at +1.1%pa

population growth compounded over 15 years yields +17.6% growth. Assuming that the new population spends the same as the existing population, this means a similar growth rate of, say, +17.6% in retail spending (current dollar values, not inflated values). And assuming similar $/m2 ratios as achieved today in terms of retail floorspace (no change in sales/m2 efficiency), it also means +17.6% increase in retail m2GFA/floorspace. That is, say 121,000m2GFA additional floor space, on top of : • 2006 base today = 448,700m2 GFA • plus growth +20yrs, at “average” Option (ii) as per Regional Retail Study = +240,000m2 sub-total : say, 688,000m2 at 2026 • plus growth 2026-2041 @ +17.6% = +121,000m2 TOTAL, say, 800,000m2GFA at 2041 Recall, the above growth is from population growth only. Real Income Growth

4. The issue of “real income growth” is a factor which influences both the existing population base, and future population growth as it comes to pass. Overall, it can make a significant contribution to future retail sales and floorspace demand.

5. As reported in the Regional Retail Study, modelling section, “real income

growth” has been slightly less than 1% over the past 9 years of 1998 – 2007 (this relates to data from the NZ Statistics Household Economic Survey, undertaken 3-yearly).



6. +1%pa, compounding, is +16% over 15 years. This means retail floorspace growth of :

• Base at 2026 (as per#3 above) = 688,000m2 • plus growth 2026-2041 @ +16.0% = +110,000m2 TOTAL, say, 800,000m2GFA at 2041 Recall, the above growth is just from “real income” growth. Adding Together Population Increase and Real Income Growth

7. The combined growth rates for population growth at around 1.1% pa. plus real income growth at around 1% pa. = +2.1%pa compounding growth rate. The result of this combined growth rate, compounded, is mathematically slightly more than simply adding the two independent factors : • over 15 years = +36% compound growth in retail floorspace demand eg. 448,700m2 GFA base today in Waikato Region + 240,000m2 “average” new floorspace demand to 2026 688,000m2 +36% compound growth = +248,000m2 new floorspace demand during 2026-2041 • Total = 936,000m2GFA at 2041

when population + real income growth factors are combined

8. For comparison in growth of retail floorspace : • base at 2006 “today” = 448,700m2 GFA with 233,000 population base • plus growth +20yrs / 2006-2026 = +240,000,2 GFA “average” with +86,000 population growth _________ say, 688,000m2 GFA • plus growth +15yrs / 2026-2041 = +248,000m2 with +56,000 population growth (as per #7 above) __________ say, 936,000m2 GFA

This is a large increase in “demand” for new retail floorspace, certainly much larger than actual population growth alone - Eg. +108% growth in floorspace vs. +61% population growth over 35yrs



It is clear that the “real income growth factor” makes a large difference, because it is added to the “existing population” as well as “future population growth”. This method of growth means that, progressively, each person in the region would see an ever-increasing amount of retailing space, and retailers would see no efficiency increases in sales per square metre.

Which leads to a key question : Is this a sustainable relationship – retail floorspace growing at a faster pace than population growth? Alternative Methods and Considerations

9. A fundamental question about future floorspace projections needs to consider : is a higher rate of retail floorspace growth compared to population growth sustainable? For example, IF the current residential base can be assumed to have its retail needs more or less fully met (a reasonable assumption in Waikato, given the general surplus capacity in commercial development opportunities still to be developed within existing centres or on already zoned land), why then is floorspace demand likely to increase further for the existing population base? If the existing population was static, would more retail space be required? Most likely, the answer is “very little”, as explained below. Therefore, other considerations and tests need to be applied to the question of estimating future floorspace demand beyond straight-line compounding growth, especially in the longer-term, because the main “growth driver” today looks to be shifting towards population growth primarily with reduced value to real income growth.

10. Projecting future retail demand using only modelling based on

compounding growth rates is misleading because it “over-projects” demand, especially in the longer-term. For example, if modelling based on compounding growth rates is carried out over an extended period of time eg. say over 100 years, and at 2.5% pa, overall growth in floorspace demand could be at +1056% over current levels. Or if +4%pa is used for example, then +4857% !!



The following table illustrates what happens to growth through applying compounding growth rates over time :

Years 1% 1.5% 2% 2.5% 3% 4%

10 10.5% 16.0% 21.9% 28.1% 34.4% 48.0%

20 21.9% 34.7% 48.6% 63.9% 80.7% 119.1%

30 34.4% 56.3% 81.0% 108.6% 142.8% 224.3%

40 48.4% 81.4% 120.7% 166.0% 226.3% 380.0%

50 63.7% 110.5% 169.1% 239.4% 338.6% 608.5%

100 168.1% 343.1% 624.4% 1056.8% 1822.7% 4857.3%

11. The effect of compounding over a planning timeframe is clear: even a seemingly modest annual rate leads to exponential growth when compounded over time.

12. And the concern about retail floorspace projections expanding far greater than population growth support is clearly illustrated –

• 100 years at +1.0% pa (about the population growth rate alone) yields an overall increase of +168 % • whereas, 100 years at +2.% (say, 1.0% population growth plus 1.0% real income growth factor) yields an overall increase of +624%. The difference is substantial – almost 4 x times as much growth occurs above the basic influence of population growth when the additional factor of real income growth is included.

13. So, alternative considerations need to be recognised :

1. The future of anything is generally not a straight-line projection of history, particularly not in the longer-term. Compound growth cannot continue indefinitely, as demonstrated by the 100 year growth scenario explained (e.g. the difference between +1%pa and +4%pa. compounding over 100 years is not simply a fourfold increase – it is almost a x29-fold increase).



2. As an alternative, a “m2/per capita” method was investigated. This approach analyses how much retail space is currently being used in a particular area, and then divides it by population to get a per-capita measure.

Around New Zealand, data from 6 x study areas (e.g. Waikato, Tauranga, Rotorua, Wellington, Christchurch, Manukau City) identified a fairly narrow range from around 1.9m2/per capita to 2.5m2/per capita.

The existing Waikato Regional standard is 1.9m2/per capita. (eg. 449,000m2GFA / 233,000 population at 2006 = 1.93m2/per capita)

This method assumes:

1) that consumer retail needs are currently being met by the existing retail floorspace, and that

2) the amount of space currently in the market is about right from the retailers’ point of view (not constrained, and not excessive).

The “m2/per capita” method also includes the prospect that many existing retail businesses have the ability and desire to expand sales within existing premises. It is reasonable to assume the existence of some “slack” in productivity rates for existing m2/retail space, and that retailers would aspire to increase their efficiencies beyond current levels.

If sales per square metre can be increased above current levels, even by a modest amount, then even the more conservative square metres per capita approach will over-estimate potential future demand.

Applying the m2/per capita method to Waikato Region, at say between 2.0m2 to 2.5m2 / per capita new retail space for new population growth, identifies a future “demand” of :

• over 20 years, 2006 - 2026 at +86,000 population growth projected :

+172,000 to +215,000m2GFA demand for new floorspace vs. +240,000m2 “average” calculated by modelling used in the Regional Retail Study work base

• over another +15 years, 2026 – 2041 at +56,000 population growth :

+112,000 to +140,000m2 GFA demand for new floorspace vs. +248,000m2 calculated using +2.1%pa compounding over 15 years.

There are obvious differences in the results, with the modelling base (using compounding growth rates) producing much higher “m2/floorspace demand levels”.



3. On-line shopping is growing at a fast pace. For example, the use of Amazon.com does not require the presence of 50 stores around New Zealand to achieve product distribution. In fact, it requires no physical shop presence at all in New Zealand.

4. New Zealand is also consistent with worldwide trends which show faster retail sales growth in “services” rather than “products.” This trend is clearly evident in categories such as entertainment (Sky TV), tourism, and mobile and internet communications. These offerings require less square metreage of store space than traditional goods.

5. For the past decade, New Zealand consumers as well as other western world countries, have enjoyed the benefits of low product costs courtesy of low labour costs primarily from Asian manufacturing sources. This has minimised inflation and enabled more buying power for all kinds of things. However, this trend is now changing to higher labour costs, accompanied by higher costs in raw materials. The result is higher product costs to consumers, rising at rates of “inflation” greater than rising rates of income growth. Consequently, less consumer purchasing can be expected.

6. “Building obsolesce” can be expected over 20 years for some existing buildings, and for many existing buildings over 50 years, and for most buildings over 100 years. This means the opportunity will exist to re-build/ re-develop existing commercial sites into whatever is a more modern form at some given future time. The result will be a more efficient development on an existing commercial site rather than new greenfields development at the city fringe. This type of re-development potential is emerging around the Hamilton CBD today.

7. The cost of energy cannot be taken for granted. Oil in particular affects many products and aspects of life often taken for granted (at least until recently). The longer-term price scenario for oil looks to be a continued upward trend, which will require adjustments to current consumer patterns. Transportation and shopping will reflect such adjustments. Exactly what the adjustments will be are hard to be precise about, but it is likely to involve more public transport and fewer private vehicles, and more local shopping. “Locavour” is an emerging term used to reflect this trend towards stronger use of “local” for many things, including shopping and development patterns and development intensity.

14. The above issues suggest that it is not appropriate to rely singularly on modelling and compounding growth rates to estimate future retail sales and floorspace demand. In fact modelling, without some regard to and temperament by other issues, could easily lead to substantial over-supply of new retail floorspace and new commercial land.

15. For the above reasons, we have carried out a general modelling exercise in the Retail Study, but we have also tempered our interpretation of the results by having regard to other considerations, as noted above.



A Prudent Approach to “New Floorspace Demand” for Waikato Region

16. In the context of the above comments, the modelling approach used to help forecast potential future floorspace demand most likely “over-projects” demand, certainly in the longer-term.

It is noteworthy that our modelling work assumed real income growth of +1% and also population growth as per your regional projections from University of Waikato at about +1.1% -- in total, +2.1% p.a. compounding.

On the other hand, it is noteworthy that retail sales have grown by around +4% p.a. over recent years at a national NZ level – a feature enabled through rapid growth in household debt rather than income growth.

The compound growth table, above, shows what happens to growth in the long-term at +4% p.a. = +4857% over 100 years, obviously unsustainable, not to mention growth in household debt which has been supporting a significant part of retail sales growth also not being sustainable.

Even +2.0% p.a. compounded over 100 years is over +624% increase.

17. On the other hand, another perspective looked at retail floorspace as a function of m2GFA/ per capita. This method assumes that consumer retail needs are currently being “met”, more or less, by the existing retail floorspace – an assumption that looks reasonable in the Waikato given the range of development capacity currently available but not yet actioned.

In this scenario, future population growth is the key variable. A range of 2.0m2/per capita to 2.5m2/per capita has emerged from comparative research into this feature at 6 x cities around New Zealand. Applying a m2/per capita value to projected population growth in the Waikato suggests the following demand for new retail floorspace.

• 20 years population growth, 2006-2026 : projected at +86,000 people between 2006-2026 x 2.0m2 per capita , or 2.5m2/per capita +172,000m2 GFA to +212,000m2 VS +240,000m2 GFA “average” calculated from Modelling (see Regional Retail Study work)

… and …

• +15 years more population growth, 2026-2041 : projected at +56,000 people between 2026-2041 x 2.0m2 per capita , or 2.5m2/per capita +112,000m2 GFA to +140,000m2 VS. +248,000m2 GFA calculated using simple compounding at +2.1% pa over 15 years, for real inome + population growth = growth of +36%



18. There are obvious differences in the results, with the modelling base (using compounding growth rates) producing much higher “m2/floorspace demand levels”.

19. In the end, it is our opinion that a prudent approach for Waikato Region is:

(i) That regard should be given to several current economic factors suggesting the likelihood that future retail floorspace demand will be different from the experience of recent years, most likely leading to a lower level in demand. Factors include:

- • The future of anything is generally not a straight-line projection of history;

- • On-line shopping is growing at a fast pace.

- • There is a clear trend towards more retail sales growth in “services” rather than “products”.

• Higher product costs to consumers, rising at rates of “inflation” greater than rising rates of income growth, will reduce consumer purchasing power.

• Retailers will desire to increase their productivity over time, and would prefer moderate-sized efficient premises to large and inefficient stores.

• Higher costs of energy will change many things, much of which are not clearly known today.

• Today, consumers are reducing spending, particularly due to a decline in debt growth to fund retail spending.

(ii) Therefore, the standard of +4% p.a. growth, as per the growth experience in retail sales over recent years, is far too high.

(iii) The standard of +2.1% pa. growth, as used in our modelling, could be considered a “high” projection over the next 20-years, and it is undoubtedly too high when applied in the longer-term.

Over 20 years, future floorspace demand is identified at +240,000m2 “average” position, an increase of +53% in floorspace over today,

… While over another +15 years, 2026-2041, the same compounding rate of +2.1%p.a. suggests growth of +248,000m2 in new floorspace,

... meaning demand for over +100% increase in floorspace additional to existing floorspace over 35 years.

(iv) As an alternative approach, a m2/per capita standard has been investigated. This method emphasises the population growth factor as the primary variable in demand; population growth is strong around the Waikato Region.



Over 20 years, 2006-2026, with Waikato population growth projected at +86,000 people, then new floorspace demand is identified at between +172,000 to 212,000m2 (+172,000m2 assumes about the current m2/per capita value found in the Waikato of 2.0m2, whereas the 212,000m2 value assumes 2.5m2 per capita as found as some other cities in New Zealand).

And over the next +15 years, 2026-2041, with Waikato population growth projected at +56,000 people, then new floorspace demand is identified at between +112,000 to 140,000m2 (+112,000m2 assumes about the current m2/per capita value found in the Waikato of 2.0m2, whereas the 140,000m2 value assumes 2.5m2 per capita as found as some other cities in New Zealand).

20. Developing a range of projections

In many long-term planning projects, it is a standard approach to develop a range of scenarios which reflect different assumptions. This is common even in population studies, which are considered to be more predictable than most economic variables. Therefore, we have developed a range of projections for future floorspace, which are presented below.

The “existing standard” of about 2.0m2/per capita around the Waikato could be considered a “low” projection.

And the standard of 2.5m2/per capita could be considered a “medium projection”.

And the modelling forecast using compounding growth factors could be considered a “high projection”.

Waikato Retail Floorspace : BASE TODAY 449,000m2

… plus growth over +20 Years +another 15 Years

LOW +172,000 +112,000 +38% over “today” +18% over 2026 base 621,000m2 @ 2026 733,000m2 @2041

MEDIUM +212,000 +140,000 +47% over “today” +21% over 2026 base 661,000m2 @ 2026 801,000m2 @ 2041

HIGH +240,000 +248,000 +53% over “today” +36% over 2026 base 689,000m2 @ 2026 937,000m2 @ 2041

… compared to population growth of ... +37% over “today” +17% over 2026 base



21. In our opinion:

… the “High” forecast is, indeed, too high, especially in the longer-term after 2026...

… while the “Low” forecast may be potentially too low, particularly in the shorter term.

… so, for the “longer-term” of 2026-2041, around the “Medium” forecast (plus or minus) looks to be a reasonable target because it provides for meeting all future population growth demands, plus it also provides some additional scope for growth arising from other possible influences.

PART B : Where to Provide for New Retail Floorspace

22. Over the next 20 years, 2006-2026, the Regional Retail Study outlined floorspace allocation in the following general manner.

FIRSTLY, projected population growth over the next 20 years, 2006 – 2026, is +86,000, generally allocated –

- Hamilton City + 52,000 - Waikato District + 18,000 - Waipa District + 15,500 - Morrinsville area + 500

SECONDLY, projected demand for new retail floorspace has been identified in the range of –

- - LOW +172,000m2 - MEDIUM +212,000m2 - HIGH +240,000m2 “average” from Retail Study

- For planning purposes as outlined in the Reginal Retail Study, future demand over the next 20 years 2006-2026 has been assumed at +/- 240,000m2 new retail floorspace.

-

- THIRDLY, allocation of new retail development is expected around the Region as follows:

• Hamilton City

+ 20 years : where is the growth ? New growth cells are well identified around the City fringes, plus some infill development within existing suburbs, and also some inner-city apartment development which is a trend underway today.



: as outlined in the Regional Retail Study, there looks to be considerable capacity for new retail growth available within established retail centres, and existing zoned land, and in new retail centres identified within growth cells around the City fringe.

: potential development capacity for at least +163,000m2 new retail floorspace has been identified around the City, and likely more capacity - + 30,000m2 or more in the CBD and Fringe + 83,000m2 or more in the Te Rapa area + 7,000m2 at Chartwell + 43,000m2 in new centres within growth cells

: ... and likely more capacity up to, say, +38,000m2 “unallocated” around the City but likely to occur in the main retail areas of the CBD + Te Rapa – therefore, lifting total retail growth to +201,000m2.

• Waikato District

+ 20 years : where is the growth? Strongest growth is projected to occur in rural sectors closest to Hamilton City – to the north, east and west of the city; this is around 75% of all growth. Growth around Huntly is expected to be limited. Growth in the north is expected to primarily emphasise the Hampton Downs / Meremere / Te Kauwhata areas.

: the Regional Study reflects the District’s intention to encourage higher density development around existing community centres to serve as “nodal” development centres (e.g. Te Kowhai, Whatawhata, Te Kauwhata, Gordonton) and also some new nodal centres (e.g. Tamahere. Hampton Downs).

: these new community centres will require the progressive development of smaller-scale community retail centres on the order of +3000-5000m2 over 1.2 – 1.5ha of land. Such centres can be expected to serve a population base of around 3-5,000 people, too small to support a “usual” supermarket or any other type of large retail activity or specialist retail business, but large enough to support a range of “everyday convenience” shops.

: accordingly, most new retail development can be expected to emphasise everyday convenience shopping; demand for other forms of shopping e.g. specialist retailing, and general large-format retail, will need to continue to be met by Hamilton City retailers because the scale of population support in community centre catchments will be too small to economically support such retail activities in local trading positions.



: over the next 20 years, improved support and some expansion can be expected for existing centres like Te Kauwhata (+1000m2) and Raglan (+1000m2), and new development can be expected, at least in part, at community centres like Te Kowhai (+1000m2), Whatawhata (+500m2), Gordonton (+1000m2), Tamahere (+3000m2), Hampton Downs (+500m2) = around +7-8,000m2 across all centres; the speed of this development will follow the rate of population growth.

: Huntly population is projected to change little, so potential for new retail will be limited; perhaps some limited growth of +1000m2 over time

: Ngaruawahia is about 10kms north of The Base, so its function will continue as a suburban centre; there is capacity within the existing centre for stronger retailing; estimated retail growth of +1000m2 over time.

: in total across Waikato District, estimated growth in retail floorspace of +10,000m2 GFA

• Waipa District

- + 20 years : where is growth? Growth projections identify expectations for strongest growth to continue in the two main town centres, Te Awamutu and Cambridge. Plus rural “lifestyle” growth is expected to continue in the “north” around Hamilton City boundaries.

- : as outlined in the Regional Study, demand has already been identified in the two town centres and Council is working through where and how to provide for this growth; also, a small suburban centre has been proposed at the Airport which will meet “everyday convenience needs” for an expanding airport workforce, airport passengers, and the surrounding rural population; plus, some likely need will likely emerge for more local shops at Pirongia as this community centre grows.

- : likely actions include the need to identify some additional commercial land in Te Awamutu, up to around +14,000m2; a definite need to identify where to accommodate growth in Cambridge, up to around +10,000m2; a new centre at the Airport is being provided for up to 5,000m2.

: in total, around +29,000m2 across Waipa District.



• Morrinsville Area

- + 20 years : where is growth? Growth projections identify limited expectations around the Morrinsville catchment, and what growth does occur is expected mostly in the township

: Morrinsville town centre is the only significant retail precinct in this study area; there are no other options. The Morrinsville town centre has just one business zone covering both retail and industry.

: there is no expectation for any significant demand in new retailing to expand the commercial centre beyond known retail areas / zoned land.

• Overall for the Region, +20 years 2006 – 2026 :

- Hamilton City looks to have sufficient space within established centres, or land already zoned or identified to handle potential future retail growth demand, at least +163,000m2 and likely up to around 200,000m2

- Waikato District will have emerging demands primarily in new small-scale community retail centres located in rural centres/villages, on the order of +10,000m2 across all centres.

- Waipa District will have emerging demands to identify new land for development in the two town centres and in Pirongia; the airport has already made provision for a new retail centre; in total, around +29,000m2 in new retail is required.

- Morrinsville Area has little future population growth to plan for, while on the other hand there is development capacity within zoned commercial areas. There is no expectation for any signficant demand to the commercial centre beyond known areas as zoned today.

- Therefore, across Waikato Study Region, there is definite provision being made for around +202,000m2 new retail floorspace. This is close to the “medium” projection for demand at around +212,000m2, so expected retail demand over the next 20 years can be accommodated within known developments and planning actions. Even if growth turns out to be stronger than anticipated around the Waikato, at say the +240,000m2 level, the area of most significant growth demand can be anticipated to be Hamilton City. Around the City, there is additional expansion capacity within established commercial / retail centres and other zoned land (beyond what has already been identified) that should be available to pick up such demand.

So, overall, existing or identified retail centres and zoned lands look to have capacity to handle most demands for anticipated new retail growth.



23. Over the next +15 years, 2026-2041, additional floorspace allocation could be considered as follows.

FIRSTLY, projected population growth over the 15 year period, 2026 – 2041, is +56,000, generally allocated –

- Hamilton City + 38,000 - Waikato District + 10,000 - Waipa District + 8,000 - Morrinsville area + 000

(using University of Waikato, Population Studies Department work, as at October 2008 – scenario PSC Medium EDA).

SECONDLY, projected demand for new retail floorspace has been identified in the range of :

- - LOW +112,000m2 - MEDIUM +140,000m2 - HIGH +248,000m2

- These growth projections have been developed and explained particularly in para. 17-21 above ...

- ... and we have suggested a prudent planning position being +140,000m2 – the medium projection.

- THIRDLY, allocation of new retail development could be expected to take the following form around the Region.

- As a general overview, we expect new retail growth to reflect population growth areas as well as existing retail focal points and the functions of such retail centres.

- Around Hamilton, population growth projections identify the expectation to achieve growth largely within the existing shape and form of the city. This is important because it basically confirms that the city population will continue to be in relatively close proximity to established major retail centres.

- Around Waikato District, growth projections identify a continuing growth emphasis in areas closeby to the City – nearby western rural, eastern rural, and north rural including Ngaruawahia account for about 70% of all anticipated growth.

- Around Waipa District, population growth is anticipated to strongly emphasise the two main town centres of Te Awamutu and Cambridge.

- Around Morrinsville area, little growth is anticpated.



- Overall, where new growth is anticipated to occur will continue to be in close proximity to established major centres. Thus, established larger centres like the CBD and Te Rapa areas, Chartwell, and the major town centres around the rural districts, will continue to be key retail focal points. Future retail growth should continue to reflect the strong functional roles of these major centres through ongoing expansion in and around such centres where possible. Even some of the smaller suburban centres could be expected to benefit from growth provided development capacity exists. Few “greenfields” centres are anticipated.

Specifically :

• Hamilton City

- another +15 years out, being 2026-2041

: growth is projected at +38,000 around the City, lifting the City’s total population base to around 224,000 people at 2041.

: where is the growth ? Known growth cells around the City, as already identified today, look to have capacity to handle future growth up to +50 years out – well beyond the 35-year planning period in FutureProof.

: this implies a city shape and form that is quite similar to what generally exists today.

: consequently, major retail focal points like Te Rapa (The Base, Supa Centa, etc), the CBD, and the Te Rapa Road link between these areas, will continue to be centrally located to the City’s residential base and visitor activities and regional base, and should remain a focus for new retail growth.

: elsewhere –

- The west can be expected to change little from what is known today (including Rotokauri growth cell), so there is no need for adding any major retail centre - In the east, Chartwell is a unique feature in the retail hierarchy, and is expanding. But ongoing expansion looks very constrained. - Growth at the northeast can be handled by Rototuna town centre plans - Growth at the eastern edge can be handled by suburban centre plans in the Ruakura area.



- Growth in the south can be handled by development plans in the Peacockes area and likely expansion of the existing Glenview centre

•• So overall, where is the growth potential? (additional to that already identified in the 20-year plan 2006-2026) . . . Most likely areas include : • Te Rapa (additional to Base, Supa Centa) +30,000m2 - continued development as a major focal point

- • Te Rapa Road “strip” +25,000m2 - continued development along the road frontage between “North” Te Rapa and CBD • CBD and CBD Fringe +30,000m2 - re-development projects

• Infill development at various existing suburban centres around the City +20,000m2 TOTAL : 105,000m2

• Waikato District

- - another +15 years out, being 2026-2041

: further growth is projected at +10,000 around the District, lifting the total population base to around 74,000 people at 2041.

: where is the growth ? According to the growth projections, growth is expected to continue mostly around the Hamilton city fringes worth some 70% of new growth; some of this will occur in the established town centre of Ngaruawahia, but most is in rural areas about evenly split east and west of the City. This continues historical trends, a trend re-enforced by the importance of Hamilton as the largest employment centre in the Region. Huntly township has little growth expectations; also, little growth is expected in the southeast around Tamahere/Matangi. In “the north”, Te Kauwhata is expected to be a strong growth focus.

: at this time, Council intentions are to encourage rural population growth into “nodal centres” such as established community centres or even new community centres, rather than simply allow lifestyle development across rural land. This will help support some useful retail and community centres.



: Ngaruawahia town centre is projected to receive reasonable growth largely functioning as a Hamilton suburb; some growth in “local retail” can be anticipated, in part using/redeveloping existing land – say, +5,000m2 GFA

: whereas, growth in Huntly township will be limited as will be retail growth; Huntly still fills an important town centre function, and based on this funciton some limited expansion in retail could occur, say +2,000m2

: ongoing expansion of the several small community centres can also be expected in response to ongoing population growth – say, +500m2 per centre x around 7 centres = say, +3,500m2 across all centre – with strongest growth of any community centre being based in Te Kauwhata, say worth+1500m2 retail growth.

: new retail development will be strongly determined by the rate of population growth actually occurring in and around the community centres.

: overall, new growth could be expected : • Maramarua + 500 • Te Kauwhata +1,500 • Hampton Downs + 500 • Huntly +2,000 • Ngaruawahia +5,000 • small community centres +2,500 eg. Gordonton, TeKowhai, Whatawhata, Tamahere,Raglan at say, +500 each

TOTAL +12,000m2

• Waipa District

- - another +15 years out, being 2026-2041

: further growth is projected at +8,000 around the District, lifting the total population base to around 67,000 people at 2041.

: where is the growth ? A continued emphasis is placed on the two main town centres, Te Awamutu and Cambridge, and secondarily on rural “lifestyle” especially in the “north” immediately below Hamilton City boundaries. Today, the two town centres contain 60% of the District’s population and this “dominance” is likely to increase, meaning each town centre could have around 20-25,000 people each by 2041; Cambridge is expected to emerge as the larger township whereas today they are both of similar population size.



: new retail demand will arise particularly in the two town centres because the population base will be expanding to a scale that is able to support a wider range / type / scale of retail. Currently, the majority of shopping for “everyday convenience” occurs locally, but speciality retail and large-format shopping occurs in Hamilton City. However, with an expanded customer base to over 20,000 in each township (vs.13,000 in each township today), more specialty and large-format retail activity is likely to emerge directly in Cambridge and Te Awamutu town centres as a result of an enlarged market.

: some expansion of local shopping may be required at community centres like the Airport, Ohaupo and Pirongia.

: overall, new growth could be expected : • Cambridge +10,000 • Te Awamutu +10,000 • Pirongia + 1,000 • Ohaupo + 1,000 • Airport + 1,000 (additional to 5,000 initially proposed at Airport)

TOTAL +23,000m2

• Morrinsville Area

: little populaiton growth is expected, and consequently, little retail growth is anticipated

: any new retail expansion is likely to be able to be accommodated wtihin the established commercial zone

• Overall for the Waikato Region, over the period 2026 – 2041 :

- Hamilton City is expected to have a similar shape and form to what is known today, so existing centres can be expected to remain important and experience much of the future growth demand, particularly the main retail precincts around the CBD and Te Rapa; -- in total, future retail growth is estimated at +105,000m2

- Waikato District is likely to see a continuation of emerging demands for new small-scale community centres in rural community centres/villages. Also, some new demand in the two main town centres of Ngaruawahia and Huntly; -- in total, around +12,000m2 in new retail demand.



- Waipa District is likely to see emerging demands in similar areas to what exists today, especially the two town centres; the airport could see need for some limited expansion, and also the small community centres; -- in total, around +23,000m2 in new retail demand.

- Morrinsville Area is likely to see little growth in population and in new retail demand; no specific growth is provided for, but existing commercially zoned land has further development capacity.

- Overall across Waikato Region, for the 15-year period 2026 – 2041, provision needs to be made for around +140,000m2 new retail floorspace. This is equal to the “medium” projection for demand, as set out above, generally allocated : • Hamilton City +105,000m2 • Waikato District + 12,000m2 • Waipa District + 23,000m2 • Morrinsville area + 000m2 TOTAL +140,000m2 GFA

CONCLUSION

24. Some alternative research has been investigated to cross-check the usefulness of projecting potential future retail floorspace demand via (i) modelling, using compounding growth rates, compared to (ii) regard to an alternative measure of m2/per capita, and (iii) regard to major issues likely to influence future retail demand.

25. The results of this research have helped to establish a range in projections for future retail demand – with “high”, medium” and “low” options.

Waikato Retail Floorspace : BASE TODAY 449,000m2

… plus growth over +20 Years +another 15 Years

LOW +172,000 +112,000 +38% over “today” +18% over 2026 base 621,000m2 @ 2026 733,000m2 @2041

MEDIUM +212,000 +140,000 +47% over “today” +21% over 2026 base 661,000m2 @ 2026 801,000m2 @ 2041

HIGH +240,000 +248,000 +53% over “today” +36% over 2026 base 689,000m2 @ 2026 937,000m2 @ 2041

… compared to population growth of ... +37% over “today” +17% over 2026 base



26. The “high” projection, using compounding growth rates, looks to move further and further towards an extreme position as more time passes, simply due to the mathematical function of compounding over time.

By +35 years out, the potential increase in new retail floorspace is over +100% whereas the expected increase in population growth is +60%. This is a very substantial increase in potential floorspace, and considered unlikely.

27. The “medium” and “low” projections reflect an alternative approach using a range in m2/per capita as a general guide to demand. The m2/per capita standard is based on existing circumstances as assessed in 6 x cities around New Zealand.

28. In addition, several issues have been commented on that are expected to have some influence on future retail demand, primarily leading to the conclusion of some reduction in factors driving growth for new floorspace.

29. Therefore, overall, we believe a prudent position for Waikato Region is to adopt the “medium” projection for planning purposes.

30. Using the “medium” projection, consideration has been given to “where” to allocate future floorspace growth. Our thoughts on floorspace allocation have been set out above, and Table A, following, summarises the findings.

•••• •••• •••• ••••



TABLE A

Future Retail Floorspace Demand – 35 Year Growth Scenario : 2006-2041 • Where Growth is Expected to Occur •

Location First 20 years Next 15 years Total 2006-2026 2026-2041 Over +35yrs Hamilton City +163,000m2 +105,000m2 +268,000m2 • CBD and Fringe 30,000 30,000 60,000 • Te Rapa 63,000 30,000 93,000 • Te Rapa Road 20,000 25,000 45,000 • Chartwell 7,000 ?? 7,000 • Various Suburban Centres 43,000 20,000 63,000 ... and up to ... • unallocated ** 38,000 lifting total growth up to +201,000m2 Waikato District +10,000 +12,000 +22,000 • Ngaruawahia 1,000 5,000 6,000 • Huntly 1,000 2,000 3,000 • Community Centres 8,000 5,000 13,000 - several eg. Raglan, Te Kauwhata, Te Kowhai, Whatawhata, Gordonton, Tamahere, Hampton Downs Waipa District +29,000 +23,000 +52,000 • Cambridge 10,000 10,000 20,000 • Te Awamutu 14,000 10,000 24,000 • Airport 5,000 1,000 6,000 • Community Centres 0,000 2,000 2,000 eg. Ohaupo, Pirongia Morrinsville Area + 000 + 000 + 000 REGIONAL TOTAL +202,000 +140,000 +342,000 ** + 38 “unallocated” in HCC +240,000 “average” from modelling in Retail Study Vs. “Medium” GROWTH DEMAND PROJECTION +212,000m2 +140,000m2 +352,000m2 Existing m2/GFA in Waikato Region TODAY 449,000m2 FUTURE POTENTIAL RETAIL m2/GFA 661,000m2 801,000m2 801,000m2

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