Rumours of my death have been greatly exaggerated


Amazon the monster, gobbling-up all the poor retailers. The children’s book and DVD’s can’t be far away. Every other media genre has set the scene. The countdown to the collapse of what is in some economies their number one employer, has commenced, or so you are now told from any media channel you turn to.

Having recently returned from an observational tour of the UK and Singapore I think of Mark Twain. “Rumours of my death have been greatly exaggerated”.

So many contributors of chapters and illustrations to the forthcoming ‘Amazon the Monster’ series forget there’s been a precedent. Another monster, WFH was going to murder the office market. Magazines featuring the ascent of ‘Working from Home’ still turn-up in second-hand shops. And yet wherever you look in the world today there’s another crane. Madmen continue to build office buildings. They ignore the tsunami of WFH, which must ultimately sink them.

The parallels are identical. WFH avoids the commute nightmare. The cost savings are obvious. Through the marvel of the internet you have access to a vast range of technology from home. You can work in your pyjamas. Your presence in the office shrinks from five days a week to perhaps once-weekly. Can you think of any form of media that didn’t trumpet this revolution?

They have short memories. The world’s square meters of office space may have doubled since this monster first appeared in headlines.

Both Amazon and WFH monsters share the same metabolism. Their growth relies on men and woman temporarily suspending centuries of development of physical interaction. In simple terms, ultimate triumph requires mankind to transform. Amazon, Alibaba and their ilk are already hugely successful. Their growth has the financial press salivating. But are they ultimately the subsidised cycle lanes that councils tell us mankind will adapt to, or the motorway?

Motorways are unquestionably under threat. More people worldwide are cycling or scootering. The colossal impact autonomous vehicles will have in our lifetime is still largely ignored by many city Planners. But none of these point to the likelihood of there being pedestrians on motorways, which is a corollary from the online shopping predictions.

The critical X-factor so hugely under-rated by the authors of both monster stories is human interaction. This is something that has its roots in caves. Good luck to those who suggest it’s about to be re-engineered by Jeff Bezos and Jack Ma. Part two in the story may be mankind’s rejection of the farce of Gods for the enlightenment of Netflix.

Australians have a lovely expression, they’re having a lend of us. And that may be a highly appropriate way of summing-up the swarm of online shopping evangelists.

Of course retail is experiencing a revolution. Internet shopping has created one of those ‘paradigm shift’ things. Retail is in turmoil. Every participant in the industry has been dragged into the vortex. But suggesting this is the death of high street stores and shopping malls is a step way too far. Those predictions are from the pens of WFH monster authors.

Anyone bold enough to suggest certain high street retailers and shopping malls may benefit from the online revolution would likely join the witches on the pyre. Such a contradictory stance in the face of evidence to the contrary is surely heresy. And yet that small matter of the history of mankind throughout eternity keeps nagging in the background. That doubt could be fuelled by the fact that the UK’s present leading ‘growth’ retailers Aldi and Lidl have no online strategy nor any intention to develop one. And then there’s the Australian franchisee of a huge American manufacturer and retailer presently negotiating to buy a New Zealand mall.

If you buy into the Amazon monster story you must accept a fundamental proposition. That being,  the sole purpose of any person visiting any retail location is to make a purchase. If you accept that proposition then the significance of human interaction has been vastly exaggerated.

We are told that retail store closures and abandoned shopping malls, chiefly across the United States but in fairness, throughout all parts of the world now known to Jeff and Jack are proof of the coming apocalypse. Thankfully the Todd family didn’t quit when the market no longer wanted the Humber 80. There are few things in our lives uninfluenced by evolution. Retail or the science of how we acquire goods and services is not immune. To those commentators so convinced they are able to accurately predict the exact trajectory of this evolution I say, I have some tulips I’d love to show you.

Online shopping isn’t without it’s own looming challenges. The Chairman of Federal Express has recently spoken of the threat of rising freight costs. Ultimately mandatory GST and some sales taxes will lessen the appeal. A right of return of goods is appealing but that fades with NZ Post’s fewer outlets and longer queues.

Most of those who write of the death of retail property ignore the critical importance of social interaction in the human experience. That human need alone slayed the WFH monster. With the exception of occasional markets, conventional town squares, at least in western society ceased to perform their original human interaction function decades ago. That same human interaction was an under-appreciated aspect of church attendance. High streets and malls are today, for hundreds of millions of people, the town square, the church or simply the place families go and sometimes shop. Clever businesspeople will forever find a way of marrying our innate need for physical social interaction with exploring our pockets.

There’s a new venue for pastries and espresso on Auckland’s Great North Road. It doubles as the showroom for Aston Martin and Bentley. In Singapore Mercedes-Benz has extended the food menu. High-growth New Zealand retailer Big Save Furniture is increasingly inviting cafes, cycle retailers and even motorcycles into its stores. Smart retailers know online can’t offer something they can, an experience, and the ‘theatre’ of retail. Watch this aspect of physical retail sprout wings.


Today’s smart retailer creates excitement about bricks and mortar shopping with DJ’s, sexy staff and positive attitudes. Embracing this theatre of retail gives a crucial edge over retailers struggling to understand social media. Those retailers will respond the only way they know how, by reducing costs. The shift within the retail sector may actually be greater between progressive and innovative retailers than the shift from bricks and mortar to online.

Change will likely produce new options too. Eventually many retailers and malls will likely offer pick-up locations for parcels from online sources. Some in Singapore already do. Rather than visit your local Council building to check a boundary, zoning or pay your dog licence you’ll likely find them also at the mall. And that’s just a few words of millions that will ultimately tell the story of how retail adapted in our lifetimes to embrace and profit from the transformation initiated by Jeff and Jack.

Transmission Gully - please tell us the truth

Perhaps never in the history of this country has so little, of such significance, been reported to so few. Perhaps never have PR hacks triumphed to the degree they have in managing the ‘spin’ on this vital highway of national significance.

The recent announcement of a miscalculation of 50% in the volume of earth to moved should have raised far more media scrutiny than it did. But perhaps we’ve reached the point where accepting what they’re told is quite okay for reporters. Our enquiries suggest there are degrees of accuracy in all of the following: the completion date will be mid- 2021 at best; unforeseen frustration on the part of Greater Wellington Regional Council (ridiculous Resource Consent processes) and other regulatory agencies, together with the additional earthworks costs have added $000’s of millions to the project cost; the Government’s been forced to renegotiate the contract with the Gateway Partnership; tolling the finished highway is almost inevitable.

Transmission Gully becoming another toll route has implications for the existing SH1 through Porirua, Mana and Pukerua Bay to Paekakariki. That road would need to remain in NZTA’s ownership with NZTA responsible for maintenance.  That’s a huge benefit to Porirua City’s already ‘gouged’ ratepayers.

gully progress.jpg

Asbestos – the commercial investor’s P – but worse?

That’s what some owners are being told. It’s not the case. Understanding and proper management of the ‘asbestos issue’ is the key.

Residential investors who’ve had a property ‘contaminated’ by P (and that’s an inexact science if ever there was one) have been able to de-contaminate. End of story. The key difference for commercial investors (excluding properties constructed post-2000) is that asbestos is with you forever. It will forever be an aspect of your property management, from April 4th 2018. But it is not the nightmare some are suggesting.

If there is any good advice around, it would be take action now. Baden-Powell had this legislation in mind when he famously said “be prepared”.  A tip we’d give you is to go online and read the Health and Safety at Work (Asbestos) Regulations 2016. An understanding of what/why may be invaluable.

There are two forms of asbestos: Non-friable – material containing asbestos fibres reinforced with a bonding compound i.e. super-six/ cladding/partitions/floor tiles etc. This will potentially cause few ‘problems’. Removal of non-friable asbestos of less than 10m2 may be done responsibly by non-licensed persons.

It’s very manageable. Friable is the ‘nasty’. Defined as ‘powder or able to be crumbled or reduced to powder by hand pressure when dry’.

What the law requires you to do by April 2018: Have all asbestos identified in your building (if pre-2000); analyse it’s condition; develop a management plan. That’s it in a nutshell – of course there is ‘extra stuff’ about having your management plan available for anyone (principally tradesmen) visiting your property – but licensed experts will take you through the fine detail.

Key feature? From 04 April 2018 when any refurbishment or demolition is proposed asbestos must firstly be removed by a licensed asbestos remover.

Finding an expert? Here’s a recommendation – ENGEO Limited, Simon Charles 04-472 0820

Is there asbestos in my property? Consider the following...


Choosing a lawyer for a commercial property transaction?

Many commercial property transactions falter as a result of the common fallacy that all lawyers are roughly equal. Far from it. As in any profession there are specialists and the not so competent in a specialist field. It’s a smart idea to seek some advice or comments from experienced investors before engaging a lawyer if you’re new to the business.

It’s a reasonable assumption that if parties have signed-up to a contract, one side wants to sell and the other wants to purchase. A reasonable assumption. And yet there are many solicitors, who the moment they receive a copy of a contract act as though they have a duty to their client to find reasons to void the transaction. It is very common to hear seasoned investors talk of the time they shouldn’t have listened to their lawyer, but did and missed a great opportunity. I’ve experienced many such examples over almost 30 years. If a retired farmer from Winton is reading this he’ll be nodding his head and sighing.

Specialist property lawyers have a nose for right and wrong, they know what to look for and where to look. When they find problems they proffer solutions, assuming they exist. They work from a presumption their client has sound reasons for wanting to buy or sell and it’s their role to intelligently negotiate the roadblocks. In Wellington David Butler (Gillespie Young Watson) Paul Dentice (Macalister Mazengarb) Murray Harden (Morrison Kent) Richard Chesney (Foot & Co) and Terry Nowland (Nowland Gordon Associates) are outstanding practitioners who fit this mould. Crucially they have expert knowledge of most legislation that impacts property. They know instinctively when a required seemingly insignificant clause is missing from a contract or is incorrectly worded. If their advice is to “pull stumps” it won’t have been arrived at lightly. Take it. It’s rare that lawyers of this calibre are unable to negotiate acceptable compromises.

You will be charged for your lawyer’s time regardless of whether your aspiration for ownership of a particular asset is achieved or not. It’s not a bad idea to ensure the lawyer you select to work with you (emphasis on ‘with’) appreciates that what on occasions may appear as fatal flaws can be converted to unintended bonuses through skilful negotiation.

Driverless cars


With the current hysteria (that's what it is) around earthquake strengthening and commercial property it's easy to ignore what is potentially the greatest game changer we'll see in our lifetime - driverless cars.

Before discounting the likely reality of driverless cars within a decade or two, consider the pace of progress when there's an imperative. The Wright Bros first flew in December 1903. Sixteen years later scheduled air services began. In 1916 there were fewer sealed roads worldwide than in Wellington City in 2016.

The impact of driverless cars was recently spelt-out in a superb column in the The Economist. That terrific publication has made a point of reporting the pace of the development of these vehicles, recognising the huge change they represent. In 2004 the best driverless car couldn't negotiate 200km of desert without incident. Google's self-drive cars, legal in many US states, have now travelled more than one million kilometres with one minor collision. Getting the picture on the pace of change?

A century ago cars changed our world. Cities were able to spread. Shopping centres were built in suburbs. Individual mobility affects everything we do. The motor industry is still the world's largest industry. The change that industry is now embracing is huge and it's underway. Many of the key components of driverless cars are already fitted to new vehicles we're buying. The motor industry's greatest R&D projects today revolve around cars without steering wheels or controls. They won't be caught napping. It is entirely possible that people now aged 50 or so will, within their lifetime, see laws banning individuals from controlling (driving) cars on public roads. Private driving could simple be uninsurable. 

What's the imperative for driverless cars? Worldwide roughly 108,000 people die in road accidents each month. That figure is estimated to hit 150,000 by 2020. In the US it's 40,000 a year, excluding the millions who suffer serious, debilitating injuries. In New Zealand each death is assigned an economic loss value of $3million. Assume it's only $1million worldwide. That's $108billion per month. Reason enough?

Picture sending a text message at 6:45am. At 7am your vehicle arrives at your gate. No steering wheel, no controls. You travel to work reading, writing emails, watching television or sleeping - in a convoy of lightweight vehicles barely a metre apart. When it drops you at the office it's off to another job. There immediately is a question over the future of carparks as investments. Local authorities face huge decreases in parking revenue. Truck and taxi driving will be jobs of a previous age. Motor vehicle insurance companies may cease to exist with nil accidents. Gone will be driving lessons and licences. Cars will know nothing else but what they can legally do. Redundancy looms for traffic cops and parking wardens. Think too of the reduction in demand on the hospitals. High-end retailers may offer free pick-up and delivery of you and your goods. The possibilities are endless. Existing roads will be able to efficiently carry three of four times the current traffic volumes. We might look back and question the need for Transmission Gully. 

An hour's commute might not be so bad - if you're sleeping, reading, writing or Skyping. So perhaps suburbs will sprawl again. Country pubs may come alive. There may be less demand for motels and hotels, instead you could travel by camper and programme it to deliver you from Wellington to the Coromandel overnight.

This is not the stuff of science fiction. The technology is here now and working. You will remember watching Maxwell Smart? Is that a phone in your pocket? The benefits to society from universal adoption are gigantic. But it will have impacts on the commercial property market. There will be winners and losers. It's a case of thinking ahead.