It was supposed to be Auckland’s answer to Melbourne’s laneways or New York’s Chelsea Market, but the empty sites at Queen’s Rise paint a very different picture. Alice Neville reports.
In June 2018, to much hype, a new “laneway-style dining destination” opened in downtown Auckland. Housed behind the historic facade of the QBE Centre building at 125 Queen St, Queen’s Rise boasted a swanky mid-century-inspired interior and 11 eateries offering “excellent worldly cuisine”.
It launched with a grand opening party, where media were treated to free-flowing booze and tasty samples of what the various eateries had to offer. The Herald covered the opening, describing Queen’s Rise as “Auckland’s trendy new dining hub”. Urban List reckoned it was set to be “the hottest foodie destination in Auckland”.
A year and a half on, and Queen’s Rise is dotted with empty tenancies. Signs on the windows still say “11 eateries upstairs”, but only seven are in operation, with four sites vacant. The cafe on the Swanson Street entrance to the building is also unoccupied, as is the gym on the first floor.
The Spinoff spoke to five people from three different businesses, Queen’s Rise tenants both current and former, all of whom spoke on the condition of anonymity. They all told a story of mismanagement, unreasonable expectations, broken promises and lock-outs. “The landlords are killing us,” said one.
Queen’s Rise was developed by Australasian property group Winton for the building’s then owners, Special Situations Assets, which bought it from the Sultan of Brunei in 2014 for $57 million, in what was the biggest property deal of the year.
It was first slated to open in December 2016, then early 2017. One restaurateur says he had around 10 meetings with Winton’s Duncan Elley and Kerry Woods, who oversaw the project, before finally signing on as one of the first tenants. His restaurant remains open.
“I took my time, because when you sign a deal you’re going to be there at least eight to 10 years, so you’ve got to believe in the people,” he says.
And believe in them he did. “Duncan had a feel for hospitality, an understanding of what we were doing. He knew that if he got us on board others would come.”
But as more tenants were secured, he began having concerns. He had been told the precinct’s focus would be on smart dining rather than takeaway, which suited the feel of his eatery – but then the site began to fill up with “grab-and-go” outlets. “The identity, they lost it.”
Queen’s Rise opened on 21 June, and almost immediately, Special Situations Assets, which is majority owned by investors in the United States, sold 125 Queen St to NZRE Corgi, a subsidiary of another overseas investment fund, the Luxembourg-founded Invesco. The Overseas Investment Office approved the $214 million deal on 20 July.
Tenants of Queen’s Rise felt they’d been left high and dry. “These were the people I’d had 10 meetings with – the guys just disappeared,” says the tenant. “For a month we couldn’t find anyone to deal with, then after that they passed the job to Colliers.”
His colleague adds that it was “almost overnight. We opened and, boom, we couldn’t get hold of Kerry, we couldn’t get hold of Duncan – nothing”.
There was no one to air their concerns with – and there were many concerns. First and foremost, despite the fancy opening and the media coverage, it soon became apparent that many people simply didn’t know Queen’s Rise was there and, according to the tenants, something like the entire year’s marketing budget was spent on the opening party.
“If you develop that sort of centre, you need to say, ‘Where is my foot traffic? Where is my signage?’ Those things should come first,” he says. “But they missed that point. I don’t know how they missed that point, but when we opened we found we didn’t have any signage from the Queen Street side.”
A former tenant – who is taking legal action against the owners in an attempt to recoup the massive losses their business suffered – says the council granted approval to put signage on a plinth on Queen Street, but Queen’s Rise “refused to spend the money”.
“There’s a big digital billboard which they give people limited access to display on, but that’s really only seen by office tenants at a very high level or from a long way away. They need it at ground level to attract and draw people in.”
The former tenant believes the plan was always to sell the building. “They [Winton] were trying to get anyone and everyone in there and plaster up the cracks and sell it, and unfortunately along the way they made a lot of promises to us and to other tenants about what they were going to do and what was going to happen and how it was going to be run.
“The reality is that none of that happened, and they basically put a mix of tenants in there that was not necessarily that cohesive.”
Duncan Elley from Winton declined to comment when approached by The Spinoff.
The first tenant to bail out was “breakfast bar, potato joint and watering hole” Potato & Me, which, despite featuring in a Herald story previewing the new precinct in 2016, never actually opened. The empty site remains – curved bar frontage, industrial lights, “tatties” neon sign illuminated.
For many of the remaining tenants, who were now dealing with property managers Colliers International, the problems escalated.
“Colliers took over the management for the new owner and they got flooded with a whole lot of issues that they perhaps weren’t aware of, but they handled it very, very poorly,” says the former tenant. “They just tried to sweep everything under the carpet, to say everything had been rectified when it hadn’t been. This went on for about four months.”
Middleton Eatery, located in the lobby of the building, was the first to close at the end of 2018. Run by experienced cafe owners, it had opened in early 2017, having been fitted out by Winton as a kind of taster of what Queen’s Rise would be. The Denizen described it as “reminiscent of an intimate members’ club, equipped with inviting lounge chairs and sofas, a great big fireplace, an ample bar and a long leather booth lined with tables”.
Says the former tenant: “The guy operating it said, ‘This isn’t working, it isn’t making sense, we need to renegotiate.’ But they refused to negotiate because they wanted top dollar. He said if we can’t reach an agreement, I’m out, so he left. He hadn’t done any of the fit-out so it didn’t cost him anything to walk away.”
The site remains empty.
The Queen’s Rise leases require every food and drink tenant to stay open all day, from morning until late at night, seven days a week, even when custom is barely existent. Weekends are particularly quiet, but all tenants must remain open. “Last Sunday, we made $350 total for the whole day,” says one tenant.
The former tenant says some businesses have been issued with $30,000 breach notices for failing to open on a Sunday – “even if they only got three or four people through in the whole day, they had to cover the full cost of staffing and got no income from it. It’s a scare tactic.”
Some tenants began withholding rent in protest of Colliers’ failure to deal with their concerns. Colliers responded in the harshest way possible – by locking tenants out of their businesses and “re-entering” the premises. This is believed to have happened to at least four businesses at Queen’s Rise.
“They just re-enter, put a security person on the door, destroy your brand – they don’t care,” says the former tenant.
Some, such as dumpling house Panda, managed to negotiate with Colliers and reopen. “They would re-enter, lock them out of the premises, take four weeks to reach an agreement and then make them pay for that four weeks rent even though they weren’t earning any income,” he says.
Others didn’t. Businesses that have closed permanently include chicken-focused sandwich eatery Dolly Bird, and Nourish Pod, which sold smoothie bowls. Grace Dining, which had the same owners as Dolly Bird, closed at the end of last year, but reopened as the more casual Mike’s Famous Seafood Kitchen & Oyster Bar early this year. It didn’t last long.
The most recent business to shut its doors was the gym on the second floor, District Fitness, which had opened in 2017. Clients of the gym received an email on 7 October informing them of the closure. “As you may know we recently had difficulties with the landlord of 125 Queen Street and unfortunately you might also have noticed we were not alone in this situation with others in our building foodcourt and on the ground floor also having similar difficulties with the landlord and moving out of their tenancies,” said the email. “The outcome is that it has not been possible for us to remain in that location.”
On 15 October, Davina Henderson, Colliers’ director of commercial real estate management, sent an email to remaining tenants saying that District Fitness’ lease had been cancelled on 30 September. “Please be assured that the landlord has taken all reasonable steps to work with this tenant during this time,” the email said.
“It’s just one after the other,” says one tenant. “They seem to be like, ‘Oh well, the rest of you just carry on, pay the money’.”
Several tenants, both current and former, say they’re dissatisfied with Colliers and Henderson. “It’s very disappointing,” says one. The impression left was that “they just don’t care, and it’s having an impact”.
When approached by The Spinoff for her perspective, Henderson said she was unable to comment and hung up the phone.
“If all the tenants are saying the same things, are having the same problems with the site, surely we’ve got a point,” says the original tenant quoted. They have tried to leave the precinct, but are locked in to their lease for another six years. They say they’re able to survive only because they have other successful businesses whose funds they can dip into.
“We tried to leave. We said, ‘We’ve spent lots of money, here’s the key’. They said no.”
The upcoming quiet summer period is a worrying prospect. “We’re already panicking because at Christmas it closes down in the city and everyone disappears,” says the tenant.
“We have other sites in the city and we experience the same loss of traffic of office workers, but we pick up those tourists because they can find us, but there’s no way they can find us at Queen’s Rise.”
Empty tenancies don’t help matters, especially when they’re in prominent positions, as the sites formerly occupied by Middleton and Grace (then Mike’s) are. The real estate listing for the Middleton space has been live since March, and for the Mike’s space since May.
Christmas isn’t the only worrying prospect on the horizon. With the massive, much-hyped new retail and dining precinct of Commercial Bay set to open in March just down the road, Queen’s Rise’s challenge looks likely to grow even steeper.
If you have any further information about Queen’s Rise or issues similar to those raised in the story, get in touch with the writer at email@example.com
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