21 April 2015
Invercargill’s central business district is the emptiest it has been for more than a decade - with more than 40 shops and offices awaiting tenants.
That’s the stark findings of the latest vacancy survey carried out by Thayer Todd Valuations. Many argue the horse has bolted in terms of driving development back into the CBD, but the question is: Where to from here?
Some argue Invercargill was in a very much worse state in the early to late 1990s during the centralisation and amalgamations of the public and private sectors. During this time the council had the view that all new business was good for the city with a permissive city plan allowing development outside the CBD.
Thayer Todd Valuations valuer Regan Johns said the company does six monthly surveys and its latest one shows the amount of empty space to be at its highest level since 2003. The survey reflected the property market to a large extent, when it peaked between 2004-2008 available space was low but since the global financial crisis and the property market downturn from 2008 the survey had climbed, he said.
Johns said the present situation had been exaggerated by the H&J Smith outdoor store site move, but even if that was removed it was still at its highest since 2003. In 2012 there was a brief period of positive action, with the survey numbers decreasing, but that was for one year, he said.
The biggest issue the CBD faced now was lack of carparking because Southlanders loved being able to park outside their destination, Johns said.
Businesses had relocated on this basis, to premises with adjoining car parks. This was a growing trend in the likes of Spey, Yarrow and Leet Sts, with industrial buildings being converted to commercial or retail. Allied to this was the drift east of professionals’ offices - such as the Crowe Horwath building, he said.
The Southland Times asked Johns about the two worst-affected areas in terms of empty shops - the east side of Dee St and south side of Tay St. Johns said the former could be affected by prevailing winds while the latter might simply be about people having to cross a street to get to their destination.
Some landlords were potentially willing to look at lower rents, but if buildings needed more investment or strengthening they needed to be able to get the return to warrant that investment. Landlords were also awaiting the government’s direction on legislation relating to building codes and earthquake strengthening.
“In the meantime, landlords are in no-man’s land.”
It was hard to forecast what the future held until the government gave more direction, which would help determine the number of existing buildings that would be retained versus the number that could be demolished. New developments were likely to be one or two storey buildings, Johns said.
Improvements in technology had also lessened the need for floor space, he said.
Invercargill MP Sarah Dowie Building and Housing Minister Nick Smith was working on the Building Amendment Bill, which could result in different areas having different risk profiles - with less stringent rules for areas with lower earthquake risk. The bill could also usher in different risk profiles for different types of buildings, depending on their use, she said.
The onus was largely on the city council which she believed had some discretion in terms of how it interpreted the building code, she said.
If the bill is passed owners have 20 years to get their buildings up to the 34 per cent standard - five years to get an assessment and 15 years to make repairs. The city council has said it welcomes the differentiation of risk zones.
Dowie said Revenue Minister Todd McClay had asked officials to look into how OECD countries collect tax on internet sales as the nature of retail had changed.
Southland Chamber of Commerce chief executive Sarah Hannan said the Chamber welcomed the government’s moves to tighten the rules on GST on online shopping to provide a more level playing field for retailers.
“We believe online competition is having a significant impact and leading to the closure of some shops locally and the loss of jobs.”
The retraction of retail was not unique to Invercargill and was impacting towns and cities around the world, she said.
“Retailers need to be focusing on and investing in a sustainable business model and ensuring they have a plan to be better than their competition, offering something more compelling.”
Chamber president Carla Forbes said the inner city development was imperative to support retailers and assist in delivering a great visitor experience.
“The vitality of the city relies on a vibrant central city hub and retail is an important part of the overall experience.”
She said Invercargill City Council was instigating an immediate initiative, utilising as many empty retail spaces as able for promotion of Invercargill, facilities, places and people.
“I understand these will be applied over the coming weeks and months, it is an innovative way to utilise the space whilst creating useful and attractive messages to promote regional pride and activity,” Forbes said.