BEFORE A BOARD OF INQUIRY DEVELOPMENT PLAN CHANGE

IN THE MATTER of the Resource Management Act 1991

AND

IN THE MATTER of a Board of Inquiry appointed under section 149J of the Resource Management Act 1991 to consider a Plan Change requested by Group Holdings Limited and Chedworth Properties Limited

______

STATEMENT OF EVIDENCE OF MARK GAUNTLETT TANSLEY ON BEHALF OF KIWI PROPERTY HOLDINGS LIMITED AND KIWI PROPERTY MANAGEMENT LIMITED (COLLECTIVELY REFERRED TO AS "KIWI") ______

1.0.0 INTRODUCTION, EXPERIENCE & SUMMARY

1.0.1 My name is Mark Gauntlett Tansley and I am a Statistical and Retailing Consultant, based in Auckland. I have read and agree to comply with the Code of Conduct for Expert Witnesses in the Environment Court, Consolidated Practice Note 2011. In preparing and presenting this statement, other than where I state that I am relying upon the evidence of another person, the evidence in this statement is within my area of expertise. I have not omitted to consider material facts known to me that might alter or detract from the opinions which I express below.

1.0.2 I am a Registered Property Consultant under the auspices of the NZ Property Institute and the sole proprietor and director of Marketplace Limited, which is a consultancy providing advice, information and evidence on growth and demographics, retail planning and related resource management matters. I have forty-seven years of professional experience, throughout New Zealand, and have been called as an expert witness for forty-two of those.

1.1.0 Waikato Experience

1.1.1 I have a long history of involvement in consultancy work in the Waikato, tracing back to the early establishment of what is now Westfield Chartwell in the early 1970's (including a management and consultancy role up to 1974). Of greater relevance in these proceedings however, was my engagement by Westfield New Zealand Limited and Kiwi Income Property Trust to give evidence before the Hamilton City Council in regard to the draft and then proposed Hamilton District Plan in 1999 and 2000, which is now the Operative Hamilton District Plan (" the Operative Plan ") and in the subsequent appeals to the Environment Court.

1.2.0 Thrust of this Statement

1.2.1 My evidence in this hearing relates to concerns expressed in the submission ("the Kiwi Submission ") by Kiwi Property Holdings Limited and Kiwi Property Management Limited (collectively, " Kiwi ") on the Knowledge Area and Suburban Centre aspects of the pPC request by Tainui Group Holdings Limited and Chedworth Properties Limited.

1.2.2 In this evidence I will briefly set the scene and background context in topics 2.0.0 and 3.0.0, before providing a detailed assessment of CBD trends over a period of 11-12 years, in Section 4.0.0. I then identify what I regard as the main factors behind those trends in Section 5.0.0, and state my concerns about future CBD prospects in topic 6.0.0. I finally turn to aspects of the pPC, and briefly touch upon Dr McDermott's evidence in that context. Where appropriate, I refer to the Proposed Waikato Regional Policy Statement (" the PRPS ") and Proposed Hamilton District Plan (" the PP ").

1.2.3 I consider that it is appropriate for there to be some provision made for office and retail activity through the pPC but that the relevant provisions need to be refined in order to be consistent with the PRPS and PP and not cumulatively contribute to adverse effects on the amenity, vitality and functionality of the Hamilton city centre.

1.3.0 Terminology

1.3.1 I will use four terms to describe various aspects of the centre of Hamilton, including the CBD, CBD Core and CBD Fringe. This section explains those areas. The terminology has been developed with reference to the Operative Plan.

1.3.2 The Operative Plan offers no definition of the Central Business District ("CBD"). However, there are two zones which contain the vast bulk of the commercial activity and for practical purposes, all the retailing lies within the Commercial Service Zone ("CSZ") or within the City Centre Zone ("CCZ"). These two areas could broadly be categorised as the CBD fringe and core areas. Both Zones lie within the 2013 statistical area units called Hamilton Central and Hamilton West.

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1.3.3 The CBD zoning pattern adopted in the Operative Plan has been a relevant and useful guide for retail surveys since its notification. However, I have tended to use more generic terms and will continue to do so in this statement. These terms are:

1. CBD Core : the operative CCZ / the commercial heart of the CBD. This area is slightly smaller than the Downtown Precinct in the Proposed Plan as it excludes both the block which contains Kmart and The Warehouse and also the larger block to the latter's north, which includes the Transport Centre and the now-vacant Countdown premises.

2. CBD Core-Plus : the CBD Core, plus the block bounded by Ward, Tristram, Bryce and Anglesea Streets. The addition forms part of the Downtown Precinct in the Proposed Plan, but is currently zoned CSZ (see below).

3. CBD Fringe : the operative Hamilton Central CSZ. The outer boundaries closely correspond to those now proposed to be zoned Central City but for my purposes, this term excludes the CBD Core (but includes the Core-Plus blocks).

4. CBD : the above areas combined, essentially the proposed Central City Zone.

1.3.4 Attachment 1, containing maps to which I refer, includes Maps 1 and 2 showing those four defined areas as well as area units earlier referred to (paragraph 1.3.2).

2.0.0 THE PLAN CHANGE PROVISIONS RE THE KNOWLEDGE AREA AND SUBURBAN CENTRE

2.0.1 The proposed Plan Change ("pPC") affects areas to the east of the former boundary of the City, transferred to it from Waikato District. The land concerned stretches from Chedworth in the north to Silverdale in the south, an extent depicted on Map 3 in Attachment 1, using a former statistical area unit map for context. As can be seen from a copy of the Census 2013 area unit map (Map 4 in Attachment 1) the pPC land equates to the newly created area unit termed "Newstead". Map 4 has been labelled to identify other relevant area units and the location of the main suburban centres east of the .

2.0.2 I subsequently use the term "Ruakura" to refer to both the Newstead area unit and the pPC area as a whole.

2.0.3 In broad terms, the Ruakura proposal includes provisions for:

1) a Knowledge Area, provisions for which enable "ancillary offices to permitted research, innovation, education and laboratory activities " as a permitted activity;

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2) a residential precinct in the northern-most part, within which a neighbourhood centre (proposed Business 7 Zone) is proposed;

3) a Suburban Centre in the south alongside / as part of the Knowledge Area, with a building footprint of 15,000m² gfa.

2.0.4 My evidence ultimately concerns the potential for item 3 above to give rise to adverse environmental effects on other centres, in particular the CBD Core and proposed Downtown Precinct area, and to be inconsistent with the direction of the PRPS and that of the PP. The context of my views is explained below, insofar as the function and vitality of the CBD and CBD Core are concerned.

3.0.0 MY 2002 EVIDENCE & BACKGROUND CIRCUMSTANCES

3.0.1 Before describing the current state of the Hamilton CBD in detail I want to make some brief background observations.

3.0.2 In my opinion Hamilton’s current circumstances stem from a change in strategy that occurred when what is now the Operative District Plan was notified over a decade ago. It was that change which led me to present evidence to the Environment Court in 2002. Since then, I have tracked relevant retail supply trends, retail spending trends, dwelling consents and household formation for Hamilton. I have drawn on that work in this statement. My concerns regarding the current state of and risks to the Hamilton CBD arise in large part from the decisions made in 2001-2003, regarding the Operative Plan. Prior to 2000, the Hamilton planning instruments had contained relatively constraining provisions for retail and related commercial development. The now Operative Plan, on public notification, proposed to liberalise many of these provisions. The decision on submissions by Hamilton City Council (" Council "), notified in December 2001, adopted an even more liberal approach, which included the application of the CSZ to what is now the site of The Base Shopping Centre in (" The Base ").

3.0.3 Both the widespread application of the CSZ (including to the Tainui land at Te Rapa) and the Council's revised proposals for rules governing retailing in the Industrial Zone were confirmed in the 2003 Environment Court decision, notwithstanding my evidence and that of others regarding the likely adverse effects of so doing. The Court also declined to introduce any constraints on retailing on the CSZ stating in its decision [at paragraph 148] that the impacts of retail development would not be sufficient to generate flow-on consequential effects (ie effects beyond trade competition). The Court accepted evidence for Council that the prospect of a Chartwell-type development at the Te Rapa CSZ was more theoretical than real. I had considered it real.

3.0.4 I consider that ensuing events have validated every one of my 2002 opinions and will increasingly do so in the next few years. That conclusion is illustrated by the subsequent analysis.

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4.0.0 GENERAL MERCHANDISE SUPPLY TRENDS

4.1.0 Trading Space Surveys

4.1.1 Further to paragraphs 1.1.1 and 1.2.1, I have been monitoring retail supply in Hamilton City both before and since the March 2002 survey that was incorporated in my 2002 evidence. These additional surveys have been undertaken in 2005, 2008, in February 2011 and in May 2013.

4.1.2 As at the end of calendar year 2010, Statistics NZ (" Stats NZ ") altered its store classifications. As my survey format has regard to the Stats NZ reporting format, it also had to change. This involved the reclassification of some types of general merchandise (" gm ") retail activity* and a much clearer definition of building and garden supply traders (never before provided). Whereas, prior to this Stats NZ revision, Marketplace surveys had brought into account some crossover building supply space into its gm outlet survey work, under the new regime, a wider measurement of that supply was made. However, this wider measure had no equivalent in the pre-2011 surveys so cannot be retrospectively re-created. Additionally, such stores are irrelevant in a CBD context, so I have excluded them in this evidence.

4.1.3 Due to the foregoing change, the summary of the surveys that I have provided in Table 1 is shown as a comparable series from 2002 to 2011, then the 2011 columns under the revised format, then 2013, also to the new format. The issues for the CBD have little to do with supermarket or other grocery and food shopping, so I have focused solely on gm outlets (excluding building and garden supplies). The commercial heart of the CBD is mainly reliant on its historical specialised and comparison retailing role, and that is captured within the gm outlet trend.

4.1.4 In the nine years to 2011, the City's gm trading space supply increased by some 67,200m², or 59%. Under the new criteria, it declined from 2011 to 2013 by 5,850m², or by 3%. The smoothed eleven-year increase would have been around 53%. However, if one looks at the 2008 Total GM Supply tally (probably around 166,000m² under the revised 2011 format) there has been little overall change since then. There had been very significant changes in the distribution of gm retail space since 2002, over that period as recorded in Table 1 overleaf:

1. Between the Court's decision and the 2005 survey, some 24,000m² of gm retail trading space was added in the IZ at Te Rapa, outside The Base, on the strength of the newly authorised IZ rules [see sub-paragraph 2.0.3(c)].

*General merchandise shops sell only or predominantly non-grocery/food/liquor products. Examples are department stores, furnishing and electrical goods outlets, apparel and personal accessory stores, recreational goods shops, pharmacies, florists and stationery stores.

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TABLE 1 : RETAIL TRADING SPACE SUPPLY (2011 survey converted to the revised Stats NZ format used in 2013)

Department Stores m² excl Briscoes Household Goods m² Homewares Apparel & Other GM Outlets m² Revised 2002 2005 2008 2011 2011 2013 2002 2005 2008 2011 2011 2013 2002 2005 2008 2011 2011 2013

The Base 0 0 12,585 18,985 16,890 16,890 0 0 4,025 5,785 6,695 6,285 0 0 12,300 18,375 18,015 20,760 Other Te Rapa 0 0 0 0 0 0 890 22,680 24,520 24,655 22,385 22,120 1,735 1,865 3,515 3,210 3,210 1,470 Te Rapa 0 0 12,585 18,985 16,890 16,890 890 22,680 28,545 30,440 29,080 28,405 1,735 1,865 15,815 21,585 21,225 22,230

Westfield 1,120 1,120 1,475 4,575 4,575 4,575 380 350 165 110 270 800 4,270 5,540 6,790 7,715 8,670 7,845 Other Hton Nth & Nth-East 0 0 0 0 0 0 1,090 240 160 120 29095 2,770 3,625 2,720 2,735 1,620 1,120 Hamilton Nth-East 1,120 1,120 1,475 4,575 4,575 4,575 1,470 590 325 230 365 1,090 7,040 9,165 9,510 10,450 10,290 8,965

CBD Core 11,440 11,440 7,420 7,420 7,420 7,420 6,075 5,395 4,660 3,875 4,250 4,730 28,230 30,855 28,630 26,185 25,530 20,520 CBD Fringe 7,215 7,215 13,990 13,990 12,105 11,635 9,685 10,990 10,160 8,205 8,945 10,250 9,590 10,205 7,680 6,335 6,335 4,885 Hamilton Central 18,655 18,655 21,410 21,410 19,525 19,055 15,760 16,385 14,820 12,080 13,195 14,980 37,820 41,060 36,310 32,520 31,865 25,405

Other City East 4,715 4,715 4,715 4,715 4,715 4,715 3,765 1,350 820 825 865 825 2,580 3,475 5,815 5,855 5,750 5,180 Other City West & Sth 2,870 2,870 0 0 0 0 7,430 7,045 6,765 6,980 9,295 6,590 8,980 10,255 13,150 11,395 8,495 11,375 Rest of City 7,585 7,585 4,715 4,715 4,715 4,715 11,195 8,395 7,585 7,805 10,160 7,415 11,560 13,730 18,965 17,250 14,245 16,555

HAMILTON CITY 27,360 27,360 40,185 49,685 45,705 45,235 29,315 48,050 51,275 50,555 52,800 51,890 58,155 65,820 80,600 81,805 77,625 73,155

TOTAL GM SUPPLY m² Revised TOTAL GM SUPPLY PROP'N Revised 2002 2005 2008 2011 2011 2013 2002 2005 2008 2011 2011 2013

The Base 0 0 28,910 43,145 41,600 43,935 0.0 0.0 16.8 23.7 23.6 25.8 Other Te Rapa 2,625 24,545 28,035 27,865 25,595 23,590 2.3 17.4 16.2 15.3 14.5 13.9 Te Rapa 2,625 24,545 56,945 71,010 67,195 67,525 2.3 17.4 33.1 39.0 38.2 39.7

Westfield 5,770 7,010 8,430 12,400 12,400 12,580 5.0 5.0 4.9 6.8 7.0 7.4 Other Hton Nth & Nth-East 3,860 3,865 2,880 2,855 2,830 2,050 3.4 2.7 1.7 1.6 1.6 1.2 Hamilton Nth-East 9,630 10,875 11,310 15,255 15,230 14,630 8.4 7.7 6.6 8.4 8.6 8.6

CBD Core 45,745 47,690 40,710 37,480 37,200 32,670 39.8 33.8 23.7 20.6 21.1 19.2 CBD Fringe 26,490 28,410 31,830 28,530 27,385 26,770 23.1 20.1 18.5 15.7 15.5 15.7 Hamilton Central/CBD 72,235 76,100 72,540 66,010 64,585 59,440 62.9 53.9 42.2 36.3 36.7 34.9 Page |Page 6 Other City East 11,060 9,540 11,350 11,395 11,330 10,720 9.6 6.8 6.6 6.3 6.4 6.3 Other City West & Sth 19,280 20,170 19,915 18,375 17,790 17,965 16.8 14.3 11.6 10.1 10.1 10.6 Rest of City 30,340 29,710 31,265 29,770 29,120 28,685 26.4 21.0 18.2 16.4 16.5 16.8 HAMILTON CITY 114,830 141,230 172,060 182,045 176,130 170,280 100.0 100.0 100.0 100.0 100.0 100.0

2. Between the 2005 and 2008 surveys, some 28,000m² of gm retail trading space was added at The Base. In the context of the original survey format, this lifted Te Rapa's overall share of the City's gm supply from a nominal 2% six years previously, to a third.

3. The above increases held gm retail supply growth to nominal levels in the rest of the City. In the CBD, there was a modest gain to 2005, lost by 2008. By then, the CBD Core had registered a decline of over 5,000m², or 11%, from 2002.

4. The 2011 survey picked up nearly all of the gm space attributable to the Te Awa Mall development (ie: the mall part of The Base); a net increase of more than 14,000m² of gm outlet trading space. Westfield Chartwell had also expanded by some 4,000m². There was a partial reciprocal decline in the CBD of some 6,500m², plus 1,500m² lost in the City West and South.

5. Table 1 switches to italics for the revised 2011 survey format and ensuing 2013 survey results.

6. Using the revised survey format, the CBD share of floorspace had fallen from 63% of the City's gm supply in 2002 to 37% in 2011. The CBD Core share had almost halved, from 40% to 21%, while The Base went from 0% in 2005 to 24% in 2011.

7. The 2013 survey reflected only modest further increases at The Base, to register 26% of the City's supply, well ahead of a shrunken CBD Core proportion of 19%. For the first time however, the survey showed a physical decline in City-wide gm outlet supply.

4.1.5 The 2013 survey shows that while gm supply in the CBD Fringe had marginally increased since 2002 (allowing for the 2011 format adjustments) the level in the CBD Core had declined by around 30%. The CBD as a whole lost about 16%, smoothing the survey differences. These consequences bear out my 2002 assessments, as summarised in topic 3.0.0.

4.1.6 The CBD's retail floorspace changes lag any adverse economic trade impacts for a number of reasons, including:

• the fact that at any given time, a minority of traders will be operating marginally or at a loss, for reasons such as those below;

• the inability of stores, other than where receiverships or bankruptcies occur, to break their lease commitments;

• the desire to maintain "image", and/or to minimise loss by trading on until a managed withdrawal is possible; and

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• loss of patronage, even when CBD representation is maintained, is not an overnight phenomenon, but more in the nature of attrition over time. It is not always clear that a downturn is permanent, so some traders "hang in there" for misplaced reasons.

4.1.7 The Table 1 trends to 2013 have not been updated this year. However, a survey of vacant retail space, undertaken in March, indicates a substantial increase in the last year and provides a strong indication that retail activity has fallen, now that the substantial temporary disruption of Centreplace's redevelopment is more or less over. In part, this view is impelled by the large increase in vacant space and by the greater number and range of former gm outlet premises that are empty, a year later. It is partly due to knowledge that Farmers has downsized in relocating to an expanded Centreplace Mall, while The Warehouse has roughly halved its trading space since the 2013 survey (and accommodated two of its subsidiary banners* on only part of its former ground floor. The former premises of Warehouse Stationery remain vacant.

4.2.0 Vacant CBD Retail Space Trends

4.2.1 Each survey reflected in Table 1 has included a tally of vacant shop space in commercial areas, generally reflecting the trading area of vacated retail premises, or assessed trading space potential of new ones. Premises under construction or refurbishment were not treated as vacant (ie they were not counted as part of the retail space supply). Table 2 below reflects those results for the CBD and the City, from 2002 to 2013, and of the CBD vacant space survey referred to in paragraph 4.1.7.

TABLE 2 : VACANT RETAIL TRADING SPACE** AT TIME OF RETAIL SURVEYS (m²)

2002 2005 2008 2011 2013 2014

CBD Core 8,870 2,415 3,850 5,985 5,570 13,165 CBD Fringe 1,390 875 695 1,180 3,475 6,455 CBD 10,260 3,290 4,545 7,165 9,045 19,620 Rest of City 1,540 475 1,185 2,785 1,025 - Hamilton City 11,800 3,765 5,730 9,950 10,070 - ** Excludes space not suited to a retail operation; eg up steps or without display windows.

4.2.2 Vacancy levels have spiked dramatically, especially in the key Core part of the CBD. In bringing the vacated ex-Farmers' trading space into the 2014 results, only the assessed ground floor level was included. I did not consider that inclusion of the first floor trading space of a former department store could be validly classified as being potentially reusable by other retail activities. The same approach was adopted for vacant ground floor premises unsuited to retail activity by virtue of set-back frontages, frontages elevated by steps, or set back behind railings, largely solid, non-glazed frontages or space exposed to non-retail arcades only.

*Noel Leeming and Warehouse Stationery. Page | 8

4.2.3 In a qualitative sense, the gravity of the situation is readily apparent in the pedestrian-orientated CBD Core. Pedestrian frontages in the following locations provide mute testimony to the loss of activities and vitality in the CBD Core:

• Victoria St, eastern side from London to Hood Sts, and on the western side, particularly on both sides of the Centreplace entrance.

• Ward and Worley Streets, effectively alongside Centreplace.

• Bryce St, including the exterior frontage of Centreplace on the Anglesea St corner.

• Garden Place, especially on the southern side.

• Alexandra St, from Garden Place to its southerly food and beverage and automotive sub-precincts.

• Collingwood St, notably the ex-Farmers site. Vacated buildings opposite the latter have been demolished and the land converted to a carpark.

4.2.4 The only Core shopping streets on which vacant space and "to lease" signs are not prominent are Hood St, on the southern edge of the Core and Barton St, to the north of Centreplace. However, the latter's interior is not exempt from under- utilisation. That part leading or adjacent to Victoria St had three vacant premises and ongoing refurbishment work when surveyed, while much of the upper level was also vacant. Seventy-five vacant retail-styled premises were found in the Core in March 2014, in addition to the equivalent of a former five on the upper Centreplace level. In 2013, there were 31 in total.

4.2.5 The vacant tally above (80 premises) are all found within the Downtown Precinct that is proposed to replace the operative zonings, within the Central City Zone. In what I term the Western Fringe, proposed to be a western extension of the Downtown Precinct, some 2,650m², including a former Countdown supermarket and seven former specialty shops within the Kmart-anchored Hamilton Central Mall, from which I expect Kmart to shift later this year. In this event, I expect the remaining small retailers to also vacate.

4.3.0 The South ern Part of the Core / Downtown Precinct

4.3.1 Although I am certain that this was never envisaged by Council, the development of "City Hall" and its associated open space, west of Garden Place, effectively split the CBD Core into northern and southern components. When this occurred, the Hamilton department store offer was located south of Garden Place - H&J Court was established on the southern side of Garden Place, Farmers was a block to the south (on the eastern part of Collingwood St) and Chandler House (all three being department stores) was located on Victoria St, just south of Hood St. All were connected directly, or closely by footpath, to Victoria St, helping create and …/ Page | 9

maintain the 1950s-1970s retail reputation of what was then known as "The Golden Mile". There was little or no shop retail activity west of Alexandra St and Garden Place, while from just south of Collingwood St, Alexandra St was not a shopping street at all.

4.3.2 From memory, Chandler House was the first to go. H&J Court expanded its premises on the Garden Place frontage just before 1970, but after later morphing into DIC and Arthur Barnett, it closed in the early 1990s. At about the same time, Farmers relocated to the western side of Alexandra St, with its main frontage again to Collingwood St (the store's location until 2013). Retail footpath linkages based on its existence and drawing power attracted new retail and other activities – to much of Alexandra St south and the opposite side of Collingwood St – so added a westerly dimension to the established southern Victoria St frontages. This encouraged, or was at least consistent with, the Plan's identification of the blocks south of Garden Place, from Victoria to Anglesea St, as part of the core CCZ and its predecessor.

4.3.3 However. by the early 1990s, retailing was thinning out on the eastern side of Victoria St, and shrinking in a northerly direction along its western side, from Hood St. By gradual transition, properties on both sides of Victoria St from Collingwood to Hood St, and west along Hood St to Alexandra St became dominated by what has become the City's main dining / leisure precinct. It has even advanced a short northward distance from Hood St, along Alexandra St, but apart from its connection to the diluted commercial activity precinct along Victoria St to its north, it has no active core-type linkages. Farmers' relocation has removed the last anchor retail store from the southern CBD Core and has led to a virtual retail-free zone south of Garden Place. The last three bullet points of paragraph 4.2.3 relate to this area.

4.3.4 From a retailing viewpoint, the events summarised above represent a reversion to a much worse commercial state than that outlined above as the starting point of the current circumstances (three department stores in the 1960s, but little east-west depth) through to the 1990s, when the enlarged Farmers only was operating, west of Alexandra St. The barrier effect of Garden Place and Council chambers, the ultimate closure of the southern anchor stores and the infill of community activities such as the Library, WINZ, CYFS and vacant premises increasingly meant and today means that there is little reason for shoppers to leave the northern Core blocks, wherein reside most of the remaining comparison shops, banks and related activities, including food and beverage outlets and entertainment.

4.3.5 In my opinion, a consequence of the above sequence is that once the retail erosion of the southern part of the CBD Core is more or less complete, any further reductions in the Core's retail activities can only occur to the north and, to a limited extent (ie: in the Core-Plus extension) to the north-west, of Garden Place. In that context, Kiwi's recent investment in an expanded and well-anchored Centreplace Mall is brave, given the extent to which the retail momentum has swung away from the CBD Core since 2005. It is already on the edge of the functioning Core.

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4.4.0 CBD Foot Traffic

4.4.1 Further evidence of the CBD’s decline is that pedestrian counts have been falling since 2000 (refer to Property Institute of New Zealand analysis of CBD pedestrian counts at Attachment 2 and Figure 1 below ). With less foot traffic on city centre streets, retailers in the CBD struggle to catch pass-by trade opportunities as retail spend is spread thinly (supply of retail floor space exceeds demand). The pedestrian count material lacks the consistency and comparability of the other source material that I rely on. My understanding is that the locations of the counts have changed over time; the hours, weekdays and dates on which and weather conditions during which such counts were taken have no doubt varied over the years; and the results vary from year to year. Nevertheless, the patterns disclosed seem to me to be clear and consistent with the other analysis that I have undertaken, in that they reinforce my view that the CBD has been in decline this century. There was no survey in 2013, because of the Centreplace redevelopment effects.

Figure 1: Hamilton P edestrian Counts

5.0.0 FACTORS CONTRIBUTING TO THE CBD TRENDS

5.0.1 In my opinion, there are two main and inter-related circumstances that have brought about reduced activity levels in the CBD, particularly in the CBD Core.

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5.1.0 Urban Form & Growth

5.1.1 In I think the 1960s, Hamilton City decided to build a new water treatment facility in Te Rapa North, downstream from its predecessor and from the urban area. At that time, the CBD was, for practical purposes "central" to the City's suburbs. This proved to be a momentous decision insofar as the City's urban form is concerned, because urban growth, of both housing and employment, was easier to service north of the established City than to its south. This encouraged and led to an eccentric growth pattern, within which the CBD became increasingly distant from the emerging suburbs.

5.1.2 It is apparent in substantial NZ urban areas, that as suburbs become increasingly distant from the CBD, they give rise to pressure for a wider range of retailing and related activities than are required by "closer in" suburbs. Thus, the CBD's relative dominance in those outer suburbs is sooner or later diminished. However, particularly in a city of Hamilton's current and foreseeable size, the CBD should continue to enjoy a retail spending inflow from the newer, more distant suburbs, together with increased patronage from its nearer urban environs, due both to their infill and intensification and increasing spending power over time. This prognosis assumes that the CBD remains the largest retail / commercial hub in the urban area. For reasons I discuss below, that is not the reality in Hamilton.

5.1.3 The other side of the eccentric growth pattern is that although the City boundary was extended southward in the late 1980s to encompass what is known as the Peacocke growth area between Glenview, Melville and the Waikato River, its growth has been very modest. It has therefore been unable to provide a material housing expansion in areas south of the CBD, which could be expected – all else being equal – to increase its geographical influence.

5.2.0 The Impact of Retail Growth in Te Rapa on Shopping Patterns

5.2.1 The circumstances discussed above gave rise to what is now the Westfield Chartwell Centre, and to more provisions for retail development in , where new domestic growth has been focused for two or more decades and will continue. They did not give rise to any empirical justification for substantial retail expansion in Te Rapa or adjacent , where there has been no material housing development.

5.2.2 Extensive retail development has occurred outside the CBD and the established commercial centres in Hamilton over the past 10 years since the liberalisation of District Plan controls discussed in Section 3.0.0 of my evidence. Much of that development has occurred in the Te Rapa North area, most obviously through the development of The Base which is now a combined large format retail centre and specialty shop mall. I consider that those developments have greatly intensified …/

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the implications for the CBD arising from the City's changing form. In addition to having a retail offer and form that is superior to that of the CBD Core, Te Rapa North provides a reputed free parking capacity of some 2,000, which would be very influential on the patronage choice of shoppers, in conjunction with its superior offer.

5.2.3 Stores opened at The Base over the last eight years are essentially located in one of four precincts:

1. The Te Awa Mall (anchored by a Farmers Department Store and operational in 2011, but with latent retailing space yet to be utilised).

2. The DressSmart "Outlet / Discount" Store Complex, operational in 2006;

3. The Base commercial balance (mainly LFR) also operational from around 2006/07 and progressively surveyed in 2008 and subsequently until 2013.

4. The Base industrial area in the northern part of the site on which a Mitre 10 and other retailing now stand, with approved significant further development potential.

Precincts 1-3 are closely arranged, so that multiple store visits can be conveniently undertaken. Consequently, The Base can comprehensively meet all major aspects of retail demand, other than that for household goods stores, which are located nearby.

5.2.4 As matters stand therefore, there is no foreseeable end to expansion of The Base, while nearby activities are adding to its drawing power. A consent has been obtained by Kmart for a department store on the opposite side of Te Rapa Rd from The Base. Earthworks on the site are proceeding. Department stores are important core anchors and if Kmart relocates from the CBD to Te Rapa North (as I think likely) The Base and its immediate environs would offer all three department store banners, whilst the CBD would be down to two, both recently downsized (Farmers and The Warehouse).

5.2.5 Further to the view I expressed in paragraph 3.0.4 therefore, I consider that there is a clear nexus between the increases in retail supply outside the CBD and other centres over the past 10 years and the decline in retail and under-utilisation of the CBD during that time and that this will continue, due to further development in the Te Rapa pipeline.

6.0.0 IMPLICATIONS FOR CBD AMENITY AND FUNCTION

6.0.1 The above discussions all identify the existing retail momentum; the CBD having lost ground and continuing to lose ground, while reciprocal gains have been and continue to be enjoyed, mainly in the north and particularly at The Base. These …/ Page | 13

trends have some distance to go before they are played out. I consider that it will take 10-15 years to stabilise and then start to reverse the foreseeable ongoing loss of Central Hamilton's retail and related commercial functions that arise from the factors discussed above. It is in that context that I have considered the impact of the Plan Change.

6.0.2 The unavoidable consequence of ongoing urban growth continuing in the north of the City is that residential growth-supported retail expansion in the northern suburbs will continue to shift the geographical boundaries of influence. On domestic growth in the City alone, The Base, supplemented by Chartwell and further retail depth in the north-eastern suburbs, will increase the market spending share of these areas and further undermine the diminished retail role of the CBD. As they – especially The Base – become larger, with the CBD continuing to shrink, there will be more spending leakage from south to north, from both City suburbs and beyond and less support for the CBD.

6.0.3 A key reason why retail activity is very important to Core CBD amenity and vitality objectives is that core / pedestrian style retailing relies on a relative contiguity of retail interest, or from the other perspective, retail activity benefits from maximising the convenience and simplicity of the shopping process. This does not apply to the same extent to large or very large specialised category stores (like supermarkets, builders supply outlets, furniture shops and garden centres). (In any event, such stores are rarely, if ever, found in core CBD locations.) This contiguity has been lost in the southern CBD Core and also in parts of the northern equivalent. Ongoing Core shrinkage will exacerbate the latter manifestation.

6.0.4 Whilst little can apparently be done to change the negative CBD momentum attributable to urban growth and further retail / commercial development in the north of the City, I consider it appropriate that the pPC seeks to mitigate such outcomes and to otherwise avoid initiatives that could lead to further CBD deterioration. In saying that, I confirm my opinion that the southern CBD Core is lost to core retailing and of an uncertain but alternative future. As to the rest, in my opinion, the only effective strategy will need to focus on slowing, stopping and reversing the balance of the Core's adverse retail slide, along with the already apparent consequences of that in the form of:

1) reduced streetscape amenity, due to significant lengths of broken or unbroken, unoccupied and unlit frontages to the footpath, repetitive and (given their dominance) increasingly forlorn "to let" or "for lease" signage and the accompanying superficial grime that reflects the absence of an internal activity;

2) loss of vitality and a sense of depression, not only in areas directly reflective of 1, but elsewhere due to the lower shopping and browsing activity in the form of footpath traffic, that has occurred because the CBD Core is no longer the busiest retail destination in the City or the Waikato;

3) under-utilisation of privately owned built resources and a related reduction in the extent to which these can be economically maintained, let alone upgraded, due to 1 and 2 above; Page | 14

4) the inefficient use of publicly-funded infrastructure, such as has been outlaid on Garden Place, pavements in the Core pedestrian areas, walkways and belvederes overlooking the River and roading and intersection reconfiguration, and public transport, including investment in the main Transport Centre and the maintenance of daily public transport services to and from the CBD; and

5) inasmuch as the CBD Core currently remains the main individual focus for tourist accommodation, the prospect that Hamilton's tourism potential will be adversely affected by ongoing and/or worsening manifestations of decline.

6.1.0 Conclusions on the CBD Core Outlook

6.1.1 My conclusions, as an echo of those I held to in 2002, are that distributional impacts have led to significant and largely irreversible adverse effects on amenity, functionality and vitality within the CBD Core / proposed Downtown Precinct. I further consider that:

1) it is inevitable that these trends have ongoing momentum, spanning at least a further decade;

2) there is a prospect that ongoing development within the City will add cumula- tively to those adverse effects, exacerbating and/or extending their duration;

3) Kiwi, as a remaining and key stakeholder in the CBD Core, together with its own tenants and all other occupiers of CBD (especially Core CBD) space, has been, is and will continue in the future to be directly and significantly affected by these events.

7.0.0 RUAKURA PROVISIONS

7.0.1 I believe that the pPC as drafted poses a threat to the CBD, whilst acknowledging that it will or should bring significant long-term benefits to the City and the Waikato Region.

7.0.2 A disadvantage for the CBD is that the main residential initiative in the Ruakura Structure Plan is in the northern part of the City. I believe that this will, to some extent, expand the choice of northern properties and the degree to which the established northerly growth inclination is contributing to the CBD's difficulties. By the same token, this would to some extent also reduce market pressure for housing in Hamilton's southern suburbs, notably at Peacocke (cf paragraph 5.1.3). Thus, this provision will add to the northern Hamilton housing dominance and the pressure that this will place on the mitigation of adverse effects on the CBD's ongoing commercial functions. However, whilst this is regrettable, I accept its inevitability. The provision for a neighbourhood centre in this enclave is supported and in my view, consistent with the thrust of the pPC.

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7.0.3 However, having considered the proposed "suburban centre" within the Knowledge Zone, I am concerned that it does not sit well with the provisions of the PRPS or the PP.

7.1.0 The Need for Non -Residential -Based Commercial Activities

7.1.1 The Ruakura proposal is grafted onto the City; it is not an island. This is recognised in the pPC's Vision Statement. As always however, the devil is in the detail, namely the Objectives, Policies and Rules of the Change.

7.1.2 I have superimposed part of the proposed Ruakura Structure Plan on adjacent areas within the proposed Plan on Map 5 of Attachment 1. This shows that apart from a small area of residential zoning south of Ruakura Rd and west of the University, there is no residential activity closer to the proposed Knowledge Zone suburban centre than the Clyde St mixed Business 5 and Business 6-Zoned centre. With that exception, the proposed suburban centre is central to the proposed Ruakura Knowledge, Logistics and Industrial Areas, along with the University Campus.

7.1.3 The relevant purpose of the Business Zones in the PP is repeated below:

"d) A business centres' hierarchy has been developed that comprises five tiers. The overall aim being to re -establish the primacy of the Hamilton Central City and define its relationship with the sub-regional centres and suburban centres, in particular, with each centre comprising one or more of the following Business Zones. …. iii. Suburban centres distributed around the City's residential neighbourhoods that comprise: • Business 5 (suburban cente core) Zone • Business 6 (suburban centre fringe) Zone iv. Neighbourhood centres serving local residential areas that comprise the Business 7 (neighbourhood centre) Zone " (emphasis added)

7.1.4 Both the suburban and neighbourhood centres are described above by reference to residential relationships. While the proposed neighbourhood centre in the northern-most part of Ruakura meets the relevant purpose and context, I consider that the proposed Suburban Centre does not, as it is completely separated from any residential neighbourhood.

7.1.5 The other bolded aspect of the paragraph 7.1.3 quotation is the reason why Sections 3.0.0-6.0.0 of this statement are before you. I am concerned that development of a Suburban Centre in the southern part of Ruakura would perpetuate and exacerbate the adverse effects on the CBD that have accrued over the last decade.

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7.2.0 The Proposed Suburban Centre

7.2.1 I can find no provision in the pPC that would limit substantively, the extent of the suburban centre's development. It is proposed to be constrained under provision 25H.12.3(b), solely by a land area limit of 4 hectares, and indirectly (and relatively temporarily) by transportation thresholds. I note for completeness that permitted retailing and related activities are also proposed to be provided for (other than in the northern neighbourhood centre) in the two main Precincts, to the following extents:

Logistics Area Food and beverage outlets and dairies, not (Rule 25H.5.2) exceeding 100m² gfa per outlet.

Industrial Park Area As above not exceeding 250m² per outlet; and (Rule 25H.6.2) Ancillary retailing.

In addition, Rule 25H.6.2 proposes that "wholesale retail and trade supplies" be provided for as restricted discretionary activities, with criteria unrelated to potential distributional effects. The quoted term is defined in the PP and relates to activities unlikely to give rise to relevant adverse effects of that kind.

7.2.2 The evidence of Dr McDermott indicates as follows, at his paragraph 21:

"A Suburban Centre Zone of up to 4ha is proposed within the Knowledge Area (Plan Change 25H.7.3.2, 25H.12.3(a)). This is to include a building footprint of 15,000sqm and provision for a park and ride facility. " (emphasis added)

Whilst this is relatively academic in terms of Kiwi's proposed amendment, I would point out that the term "footprint" is not interchangeable with gfa. A two or more storey development on a 15,000m² footprint could accommodate substantially more gfa than 15,000m². In any event, I have proceeded on the basis that 15,000m² gfa is the proposed gfa limitation (rather than footprint limitation) but with the reservations expressed in 7.3.2.

7.2.3 A 15,000m² centre, on a single level, is not required by a working / "daytime" community in this part of Hamilton, especially when dairies, takeaway outlets, cafés and bars are permitted as of right in its main business precincts and there are nearby neighbourhood centres on Silverdale Rd, Masters Avenue, Knighton Rd, East St and Tramway Rd, plus in the new Ruakura residential precinct to the north, as well as the larger suburban centres at Five Cross Rds and Grey St East. There is no reason (on distributional effect grounds) why the above should not be augmented by a small retail node in the Knowledge Zone, but in my opinion, a commercial cap of 15,000m² or more extends far beyond the unmet reasonable needs of those actively engaged, or to be employed, in the surrounding business precincts, plus related visitors.

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7.2.4 A centre of, or upward of, 15,000m² gfa, disconnected from any residential neighbourhood, could not be established unless it was capable of attracting substantial spending from a significant swathe of residential neighbourhoods, in the south-eastern parts of the City:

• Without a functional supermarket, such a centre would in my view, be hard- pressed to achieve a sustainable retail gfa of 2,000m². With a supermarket, that expectation might increase to 7,000m². However, for survival, a Ruakura-based supermarket would have to attract most of its custom from nearby non-Ruakura neighbourhoods, and therefore mainly at the expense of the Hillcrest Centre and CBD supermarkets.

• To reach 15,000m² gfa, a functional Ruakura suburban centre would have to essentially expand by way of offering higher order goods and services, led by a modest discount department store and with a materially increased range of apparel, personal accessory, recreational goods, giftware and other general merchandisers. These would also attract customers from a wider area (than that implicit in the lower profile supermarket-anchored prospect). In my opinion, this could not occur without materially affecting the CBD and some established suburban centres in south-eastern Hamilton.

7.2.5 Having regard to the PP's provisions quoted in paragraph 7.1.3, and the fact that there is no actual or potential residential suburb or neighbourhood around or adjacent to the proposed Knowledge Area centre, I do not consider that it is appropriate or necessary to set aside enough land, with a sufficiently high gfa threshold, to accommodate, among other things, a supermarket.

7.2.6 For the same reasons, but with greater regard for the stabilisation and ultimate partial recovery of the CBD, I think it is inappropriate to adopt a gfa or footprint threshold that would enable elements of comparison shopping to be represented in the Knowledge Area. I consider that a single retail / commercial node would be beneficial to persons working, or otherwise engaged, in all three Ruakura business precincts, but that a convenience retail facility would be appropriate, not one capable of meeting a significant part of the retail / commercial needs of such people and their households.

7.2.7 In addition to the foregoing matters, I note that the Ruakura proposal is to be developed over time. It is obvious at face value that such a significant under- taking will have to be incremental, as will the associated personnel and employee counts. In the immediate future therefore, there will be relatively few people actively engaged in the precincts, with a commensurately limited capacity to support any convenience retail activities. However, as proposed in the pPC, it would be at least technically possible to develop a 15,000m² centre on the Knowledge Area ahead of any permanent development in the three business-type precincts. Were this to occur, even after some of the daytime potential head-count has been established, it would clearly indicate that the "suburban centre" …/

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development is in reality, reliant upon support from the established and mainly residential areas of South-Eastern Hamilton. At least some of that support would be gained at the expense of the CBD, which is the nearest large centre to the current south-eastern suburbs and areas immediately beyond them.

7.2.8 Whilst the above proposition is theoretical, it highlights the fact that the proposed centre is in no way tied or related to development of the business precincts. This, in my opinion, is inappropriate, especially as the pPC seeks to establish an hierarchical suburban centre, in a non-residential location.

7.2.9 Having regard to the various matters raised above in my topic 7.0.0, I support the Kiwi submissions. I consider that the most appropriate way forward would be to alter the pPC provisions to enable a neighbourhood-style or extent of centre within the Knowledge Area, capped at 3,500m², similar to the uncontentious residentially- based provision in the northernmost part of Ruakura. Whilst use of an hierarchical, residentially-based type of centre may not be ideal, such a provision, in my opinion, would have no potential to create adverse distributional effects, nor to be inconsistent with the PRPS and the PP.

7.3.0 The Evidence of Dr McDermott

7.3.1 Dr McDermott supports the proposed Suburban Centre and goes so far as to say, in his paragraph 29, that between 15,900m² and 22,700m² of retail capacity, including food and beverage services, would be justified. This is without banks, personal and business services, entertainment, health and wellness facilities that would imply a supportable gfa range of some 20,000-30,000m², into which Westfield Chartwell would fit. He concludes at paragraph 31 that:

"demand for retail capacity from developing Ruakura is more likely to be above than below (his) estimate" ,

and at paragraph 32, that as a result:

"some activities, particularly services, may need to be accommodated in first floor premises " and " some of the additional retail demand will need to be satisfied by other centres outside Ruakura. "

7.3.2 The nature of these comments explains my paragraph 7.2.2 reservations. In my opinion, they imply that the term "footprint" is deliberate and not intended to refer to gfa. Consequently, my paragraph 7.2.3 and 7.2.4 comments may well be based on a conservative understanding of the pPC's intentions, in this regard. Also, the final quotation appears to indicate that the Suburban Centre's retailing functions are intended to be much more than facilities to meet the convenience needs of Ruakura's "daytime" population (to the extent that these are not able to be met by dairies and prepared food and beverage outlets located in the Logistics and Industrial Park Precincts).

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7.3.3 At paragraphs 33 and 34, Dr McDermott considers that nearby centres and the CBD are unlikely to be adversely affected by the development of a Ruakura Suburban Centre. Part of the reasoning set out is that (in relation to nearby centres):

"the capacity proposed is intended to cater primarily for Ruakura's local growth. " (emphasis added) In respect of the CBD, it (with others) is said to:

"have distinctive functions which (it) will sustain and no doubt expand as the City continues to grow. "

7.3.4 In relation the first quoted passage I would refer to my paragraphs 7.2.7 and 7.2.8, as well as the solution that I support (paragraph 7.2.9) as better identifying the realities of the purported relationship between the Knowledge Precinct centre and "the local growth of Ruakura".

7.3.5 In relation to the second paragraph 7.3.3 quotation, I note that from paragraphs 92- 122, Dr McDermott discusses the CBD, reaching the following views in paragraphs 120-122:

"The evidence considered here does not support the notion that the central city is in decline as suggested by Kiwi Property, although there are changes taking place in the retail sector as demonstrated by the consolidation of retailing in Centre Place… "

"In fact, as the dominant commercial centre in the city and region there is no doubt that the Central City will receive a substantia l boost from the growth of logistics, industrial, knowledge area investment in and around Ruakura, as indicated for the multi-modal logistics centre in the evidence of Mr Sundakov… " (emphasis added)

"In addition, the additional household income generated at Ruakura will be a further stimulus to CBD development . To the extent that this development will be enhanced by an attractive commercial centre, ensuring that Ruakura Main Street can meet the retail and associated demand within the development is consistent with promoting rather than undermining the central city economy. " (emphasis addecd)

7.3.6 I disagree strongly with the first of those quotations for the reasons set out earlier in my evidence.

7.3.7 In relation to the other two passages, my comments are as follows:

1. To the extent that Ruakura would result in increased City and regional employment (ie beyond that to be expected anyway) such employees will be housed around and probably beyond the City's residential suburbs. There will be an increase in the household count and in total spending throughout the City attributable to those new households, as a consequence.

2. This increased housing demand is likely to be predominantly met in the northern part of the City, because it contains the bulk of both the established housing and the City's new and forecast housing development.

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3. For the reasons that I have canvassed in topic 5.1.0, section 6.0.0 and also at paragraph 7.0.2, this northern growth emphasis is not particularly helpful, insofar as the CBD's retail influence is concerned. That is, I expect demand from the northern part of the City to increasingly be met in large part by Chartwell and the retail activities that have occurred in the northern part of the City over the past decade, rather than in the CBD.

4. My evidence is to the effect that enhanced urban growth has not in fact, conferred increased retail custom on the CBD, due to the extent to which Te Rapa / The Base have become the City's (and region's) dominant retail destination. Quite the opposite has occurred and is continuing.

5. Household surveys invariably show that where shopping exists, place of residence is much more important than place of employment when gauging spending patterns. In my opinion, support levels for The Base and CBD retailing are not significantly influenced by where people work.

7.3.8 I therefore disagree with the quoted passages, especially the particular assertions that I have emphasised.

MARK TANSLEY 26 March 2014

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