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Empty chairs and broken dreams: The long, slow demise of Queen’s Rise

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It was supposed to revitalise Auckland CBD’s food scene, but three years since opening, Queen’s Rise is hanging by a thread. Former tenants tell Alice Neville what went wrong. Visiting Queen’s Rise, the downtown Auckland “laneway-style dining destination” that launched to much fanfare in 2018, is a strange experience these days. If you can catch it […]

It was supposed to revitalise Auckland CBD’s food scene, but three years since opening, Queen’s Rise is hanging by a thread. Former tenants tell Alice Neville what went wrong. 

Visiting Queen’s Rise, the downtown Auckland “laneway-style dining destination” that launched to much fanfare in 2018, is a strange experience these days. If you can catch it when the doors are open, the escalators still whirr, upbeat music blares and the neon signs are lit up.

After you pass the vacant ground-floor site that was once a pharmacy and beauty salon and ascend the escalators, you’re faced with an ominous row of red Parisian bistro-style chairs, almost warning you not to go further. You’ll have no trouble finding a seat – dozens of tables and chairs are set up outside each eatery, despite the fact all but one has closed down. On a recent lunchtime visit, a pair of office workers were making use of one of the empty tables to eat their sushi, brought in from elsewhere. Chairs and tables are used to block off certain areas, too – it’s not a big space, but if you take a wrong turn you’ll find yourself momentarily trapped, which adds to a distinctly uneasy atmosphere.

A row of chairs at the top of the escalator, and more chairs blocking a space next to an empty site (Photos: Alice Neville)

Today, the sole survivor of the original 11 Queen’s Rise eateries is Panda Town, a dumpling-focused Chinese place. It’s a pleasant spot, with windows overlooking Queen Street and a low wall separating it from the abandoned food hall, which goes some way towards blocking out the depressing vibes. At least six tables were occupied on a recent lunchtime visit, with a steady stream of takeaway customers too.

Panda Town hasn’t been on its own for long: for some months Tokyo Loco Bowl battled on too. But the Japanese joint, which has another branch in Pitt Street, shut its doors on Friday, May 7, with a sign on the door attributing the closure to the lease ending.

A sign on the wall of Tokyo Loco Bowl’s Queen’s Rise site, and Panda Town, still attracting customers (Photos: Alice Neville)

Before Tokyo Loco Bowl, Auckland’s level three lockdown in August 2020 took out several other tenants in one fell swoop. One of them was juice and salad bar Jar Story, whose co-owner, Sally Chen, now says, “We just want to leave that place and get a new start.”

Because while the business closed almost a year ago, Chen and several other former tenants are still trying to get property management company Colliers International to release the deposits they made to secure bank guarantees – a bank’s promise to pay a specified sum to the landlord when a tenant defaults on the lease. Chen’s deposit was more than $20,000, and that’s at the lower end of the scale.

“I have been asking since October last year,” she says. “They either reply ‘no’ or say we will reply to you next week. Next week, next week, next week, it never happens.”

Another tenant whose business closed after the August lockdown is Joel Stirling of Poké Bar. “If we got our deposit back we’d be happy,” he says. “We’ve lost the fit-out costs, time, energy and lots of sleep. Staff have lost their jobs and people can’t pay their mortgages.”

Chen, who estimates she and her business partner have lost at least $200,000 on the business, not counting the fact they essentially worked for free for two years, says she’s heard of many landlords returning deposits to tenants whose businesses closed due to the pandemic. “We just want to release this money because business is not good at this time, especially for small businesses,” says Chen, who now runs a takeaway shop in Newmarket. 

She says in April this year, Colliers did agree to return her deposit, but when she followed up a few days later via email, she received a reply saying Colliers was “committed to Queen’s Rise and they kindly request that all tenants pay their rental”, despite the fact her business shut down eight months earlier. Jar Story was offered six months’ free rent in August, she says, but by then it was too late. It never reopened. Despite this, just before this story was published, Chen was astonished to receive a rent bill from Colliers for the coming month of June, 2021. 

The owner of Pharmville, the pharmacy and beauty salon business on the ground floor of the building, says he applied for rent relief in February 2020, predicting a lockdown was coming. It wasn’t until June of that year that Colliers met with him to discuss it. “But the meeting was really, really useless,” he says. The owner, who declined to be named, was told that for rent relief to be considered, he was required to carry out research and produce a report that set out what the effect to his business would be, and how long recovery was likely to take. 

The owner felt the effort involved to produce a report to prove how impacted his business had been, with the possibility it would take months and Colliers would still not provide rent relief, was a step too far. “If I do the research and the report and you’re still not happy and think it’s not relevant, you’re just dragging me and dragging me. You’re holding me up, I’m not making money, and I still have to pay rent.”

When approached by The Spinoff, Colliers declined to comment, saying the company was “unable to provide specific details about our clients’ contracts, negotiations and any ongoing legal matters that are still being determined”.

Several of the closed sites still carry signs from August 2020, saying they’ll reopen once the city returns to level one (Photos: Alice Neville)

It wasn’t supposed to be like this. The hype around Queen’s Rise began long before its swanky opening party in June 2018: this exciting new precinct would be designed “to rival the culinary hubs of trendy Ponsonby, the Viaduct, and Britomart”, reported the Herald in March 2015, four months later linking Jamie Oliver to the site. A year on, Denizen reckoned all eyes were glued to this “instrumental evolution in the CBD’s urban landscape”. A few weeks after it opened its doors, the Herald’s commercial property section hailed the new opening as an unmitigated success, “packed with diners” every day.

By November, restaurant reviewers suggested that was no longer the case:

Excerpts of reviews of Queen’s Rise restaurants from the Weekend Herald on November 3 and November 10, 2018

Behind the scenes, all was not well either. Queen’s Rise is housed in what’s now known as the QBE Centre at 125 Queen Street, which comprises the 1860s home of the original Bank of New Zealand plus a large office tower added on in the 1980s. The Queen’s Rise project was managed by Winton, a trans-Tasman property group headed by a Queenstown developer, for Special Situations Assets, which bought the building from the Sultan of Brunei in 2014 for $57 million, in what was the biggest property deal of the year

The earliest tenants to sign on were drawn in on the premise this would be an upmarket dining precinct, but as the remaining tenancies filled, the focus seemed to shift to “grab and go” outlets to cater to the downtown office lunch rush. They were encouraged to go high-end on their fit-outs and signed 10-year leases bound by strict opening requirements – seven days a week, from early to late, a lease condition the property managers firmly enforced, even when custom barely existed

They obviously did very, very good sales,” says Chen. “They [Winton] said, ‘You can see how busy the Queen Street strip is, we can guarantee you customers. The rent is expensive but you can definitely get it back and make a very good profit.’

“Then we started the fit-out and they said, ‘OK you got this wrong, that wrong, you need to get a better-quality light’. Each light cost us $499 plus GST and we got eight. Everything was of the best quality – that’s why we spent $130,000 on the fit-out.”

But almost immediately after Queen’s Rise opened, the property ownership changed again. 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 July 20, 2018.

The tenants were uneasy, telling The Spinoff in 2019 they felt as though Winton had disappeared overnight. One former tenant said they believed the plan had always been 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 about what they were going to do and what was going to happen and how it was going to be run.”

Colliers took over the management of the building but kept the tenants at arm’s length and, as we reported in 2019, some felt abandoned, with no one to air their mounting concerns to. Several withheld rent in protest, and Colliers reacted by locking them out and “re-entering” the premises. Despite being locked into 10-year leases, within a year several businesses had thrown in the towel.

Queen’s Rise, closed, seen from across the road (Photo: Alice Neville)

When The Spinoff last reported on Queen’s Rise in October 2019, four of the 11 tenants of the first-floor food hall had closed, along with the gym on the same floor and the cafe at the Swanson Street entrance to the building. Remaining tenants worried about how the emptying out of the CBD over the coming summer months would impact them, as well as the competition the Commercial Bay precinct, then nearing completion, would bring.

Little did they know something even worse was in store: the Covid-19 pandemic, which would hammer hospitality and retail businesses the world over. Downtown Auckland was hit particularly hard, as the work-from-home trend took hold and city offices never filled up again after the first lockdown of 2020.

Chen of Jar Story says the months between the nationwide lockdown and Auckland’s second one in August were brutal. “The first day after the first lockdown, we got only four or five customers,” she remembers. “We had to pay staff, food costs, rent, power… we couldn’t survive there. No customers, still no signs – we had been asking for over a year and a half.”

The lack of visibility had been a sticking point since the beginning – with no signs on Queen Street, it’s very easy to walk past Queen’s Rise without knowing it’s there. When it first opened, this was lauded by some as a positive. “With no visual access to the street but a six-metre stud, this could be an exclusive members’ club,” gushed Interiors magazine in November 2018. “International style has made it to Queen Street, if only you know where to find it.”  

But for the tenants, that “exclusive members’ club” feel equated to very few customers. Several tenants told The Spinoff the council had approved an application for signage, but the property managers decided it was too expensive, without asking tenants if they would be prepared to contribute.

Queen’s Rise, closed on a recent Tuesday afternoon; and a comment and response on the Queen’s Rise Facebook page in 2018 (Photo: Alice Neville)

Today, while the decals on the windows facing Queen Street still scream “open till late”, passers-by will find the imposing green doors on the heritage facade of Queen’s Rise closed most of the time. The Queen’s Rise Facebook and Instagram, which still say “open from morning until late night”, plough on, posting apparently automated updates every Monday that don’t hint at the fact this “upmarket prescient [sic]” appears to be on its last legs. On May 14, a post about Lowbrow, once Queen’s Rise’s star tenant, appeared, despite the fact Lowbrow closed its location there some time ago. According to a response to a message sent to the Facebook page, Queen’s Rise’s opening hours are now 11am-4pm weekdays, though it appears that’s applied loosely.

Posts on the Queen’s Rise Facebook page on May 10, May 17, May 14and May 22, with the empty tables of the last image finally reflecting reality

Following our first story, the other tenants soldiered on for a few months – until Covid arrived. After the first lockdown, Ottoman Mezze Lounge, which held a large tenancy in the centre of the precinct, never reopened. The remaining sites did, but were faced with a new problem: in May, soon after New Zealand moved to alert level two and dining in was allowed again, the building flooded after ongoing problems with leaking. Queen’s Rise was forced to close for several weeks. Despite this, and the ongoing impacts of Covid-19, tenants were issued with rent increase notices at the end of May. While the pandemic induced the government to make a temporary law change so commercial tenants had more time to pay overdue rent before they could be evicted, a rent freeze was put in place for residential tenancies only.

In June, eight tenants penned a letter to Invesco, the investment company that owns the building, expressing their dissatisfaction with Colliers’ management of Queen’s Rise. The letter said the precinct was at risk of complete abandonment, and asked the owner to take action. Several weeks later, Invesco replied, expressing regret over the hardships the tenants were facing, but saying little else, and insisting further correspondence must go through Colliers.

The owner of Pharmville was one of the tenants who signed the letter. Because it was an essential business, the pharmacy was able to remain open during the lockdown, but its normal daily takings of $9,000-$10,000 were down to $2,000-$3,000, mainly through online sales. “It was still not enough to cover wages and rent and all the expenses.” A large tenancy right on Queen Street, Pharmville’s annual rent was close to $1 million.

After repeated requests to negotiate, in July he and his business partners took legal advice and made the tough decision to put the business into liquidation – company directors were given temporary “safe harbour” from personal liability if they wound up during the height of the pandemic. “We tried everything we could,” he says. “I just couldn’t understand why they simply gave up on us. We didn’t do things wrong. They just really did not care about us.

“You just feel quite heartbroken. What are we doing wrong?”

After the company was put into liquidation, Colliers cancelled Pharmville’s lease. The owner said the liquidator asked if the business could stay on for a month to sell off old stock, but they were told they had to be out in two weeks, despite there being no new tenant. The liquidators did not respond to The Spinoff’s request for comment. Almost a year on, the site remains empty, with a lonely Revlon stand visible through the locked glass doors. Colliers is still advertising the lease for the pharmacy site, along with several upstairs in the food hall, billed as low or reduced cost.

Queen’s Rise/125 Queen St sites for lease on the Colliers website

At the end of August, Colliers sent Pharmville an invoice for $8 million for breaching the 10-year lease – an impossible amount for a company in liquidation to pay. As the liquidators finish winding up the company, they’ll determine how much is left in the accounts, but the owner says the final bill from Colliers is likely to be $700,000, comprising the bank guarantee and unpaid rent. He estimates they’ve lost $2 million on the business already. 

“We tried our best,” he says. “At the end of the day it’s our business, and our business is like our baby – you raise it up from when it’s born, to crawling, then walking. We would never treat that as something we’d just chuck away.”

Source: The Spinoff https://thespinoff.co.nz/business/27-05-2021/empty-chairs-and-broken-dreams-the-long-slow-demise-of-queens-rise/

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Finance Advice 2021