Confidence in the future of Tauranga's CBD has strengthened, with the city centre predicted the only area outside Auckland for future residential growth potential in 2020.
Experts say that growth will go hand-in-hand with a commercial boom, with developers and investors eyeing up vacant office and retail space in the CBD.
They are confident interest will pick up once city centre developments, such as the new Farmers build, are completed.
Tauranga ranked number 10 on Colliers International's latest prediction of the top areas for future residential growth potential, behind nine Auckland suburbs.
National director of residential projects Pete Evans said Tauranga was in for another year of exponential growth.
"Tauranga's CBD is on the cusp of transformation with significant residential and commercial development both in planning and under way."
Evans said a $250 million strip of development covering 600m of the CBD from Elizabeth St to McLean St will be completed in the next five years.
That included the new $130 million Farmers development with its 97 high-end apartments and 23 luxury townhouses and the planned four-level luxury 32-apartment build at 359 Cameron Rd set to start construction this year - and more at 2 Devonport Rd.
"The Bay of Plenty has always been a popular move due to its favourable climate and coastal living," Evans said.
"Development of the CBD is opening up more opportunities, especially for professionals and investors."
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According to StatsNZ population estimates, Tauranga City's population had grown to 144,700 from 140,800 in the last year.
Tauranga mayor Tenby Powell said Tauranga's population was only going to continue to grow.
"We can't stop it, we must plan for the growth that we know is going to come," he said.
"I call it strategic concurrency. We have got to prioritise, or we will get left behind."
Powell said people needed to change their perception of the CBD, it was crucial companies remained in the area and large corporate businesses needed to be encouraged to base their head offices in Tauranga.
Living in the CBD was a "crucial component" of revitalising the Tauranga downtown, he said.
"Tauranga has the ability to be the best small city in the world."
The Bay of Plenty Times reported in May last year that Downtown Tauranga's data showed of the 704 sites in the CBD, 550 were occupied and 154 were available for lease.
Mainstreet organisation Downtown Tauranga's chairman, Brian Berry, said there had not been much of a change to the number of shop vacancies.
"It is obvious there was still a number of vacancies," he said.
"The retail environment is still proving difficult. But there is a good demand for office space for new players as well as others who have relocated back into the CBD, which is really encouraging."
Tauranga Chamber of Commerce chief executive Matt Cowley said the CBD's long-term future looked bright.
"We are seeing an impressive amount of private sector investment in the CBD."
He said confidence from first-floor tenants and above was "as strong as ever"; however, tenants on the ground floor were less confident as they were more reliant on walk-in foot traffic.
"After a tough winter, a lot of hope was on the cruise ship passengers boosting the local trade," he said.
"We are yet to see if cruise ship passengers have provided the relief retailers and hospitality had hoped for."
Delays to the Harrington car park building had also put pressure on the limited street parking, he said.
Priority One chief executive Nigel Tutt said the council had made some funds available for projects to bring more people into the CBD.
"Long-term prospects for the CBD are excellent, but we should expect a few rough patches while larger developments are under way."
Ray White commercial and industrial specialist Philip Hunt said there had been more vacancies and people moving out of the CBD on both ground and first floors. However, he was positive this was only temporary.
"I am extremely sympathetic to the retailers, but things will change once we see more inner-city living."
Hunt said the New Year had started with strong inquiry for ground-floor leasing from smaller boutique businesses confident in the CBD's future, as well as for modern open-plan office space.
Hunt said there was a number of astute property developers and investors looking at "problematic" CBD properties that either needed demolition or seismic upgrading. Many of them were local developers who understood the situation of the CBD, he said.
"That means there is going to be more disruption as buildings are demolished or upgraded. But we will see some new buildings and probably more apartments."
OneRoof editor Owen Vaughan said the investment that had gone into Tauranga Central had been substantial in the past couple of years and the city would soon see more new apartments to revitalise the CBD.
Bayleys Tauranga's commercial manager, Mark Walton, said he had seen significant interest in the last quarter from investors with strong demand for development sites, buildings with "add value" potential and proposed developments.
However, he said it would take a few years for the CBD to become popular due to the level of vacancies and business owners waiting for larger developments to be completed before committing to a new tenancy.
"We have completed a significant number of CBD commercial property sales over the last six months, as there's a strong interest from developers and investors to secure development sites and accumulate a larger footprint to enable larger and more viable development projects," he said.
Walton said that included more interest from Auckland and Hamilton businesses wanting to grow their presence in Tauranga.
"There is definitely a high level of confidence and the interest will pick up as projects get completed."
Retailer Julie Hammon believed there was light at the end of the tunnel for Tauranga's CBD.
Hammon, who owns Hammon Diamond Jeweller on Grey St, said it had been tough trading over winter.
"We were really struggling for foot traffic and business," she said.
A lot of small business owners in the CBD met regularly to support each other through the rough patch.
"We were brought together by the difficult situation we were all going through," she said.
She was confident the future looked a lot brighter.
"We have still got quite a lot of tricky times to get through with the different projects that are going on," she said.
"But the light is definitely at the end of the tunnel."
Hammon said the city centre had been "buzzing" with people visiting over summer for holidays and the big festivals. But she worried things might slow down again soon and said it would be important for business owners to keep supporting each other.
"I think we have come through the worst," she said. "Fast-forward five years and imagine what the CBD will look like, especially with more people living in the CBD."