Rent fears in Christchurch CBD

Business owner Luisa Dacombe-Valentine. Photo / David Alexander

Christchurch's small businesses fear they may be pushed out of the central city when the rebuild is complete, as rents are likely to go up by about 25 per cent.

Graham Matthews, a director at Hampton Jones Property Consultancy and a former consultant for the body overseeing the rebuild, Cera, said the city previously had a range of tenants and commercial properties for lease - banks in A-grade buildings through to niche retailers in D-grade buildings with lower rents - but when starting a city centre from scratch, those cheaper buildings would not be present.

He said it was likely that prime commercial space would be rented for more than $400sq m a year once it became available. In December 2010, it was about $300sq m. That meant niche retailers and other small businesses would need to find smaller inner city space if they wanted to run viable businesses.

A survey of businesses by Recover Canterbury found it was a key concern. "We're worried about it," said operations manager Bridget Frame. "We've lost that cheap, old building stock."

Luisa Dacombe-Valentine, who had three businesses in the CBD before the earthquakes, is dreading the rent she will face when she is able to return to the city centre. She operated Bean Scene, a cafe, Lime Bar, and Base, a nightclub. She now has one cafe and bar outside the central city.

"It should be a concern to every business. For small businesses, margins aren't as large so the slightest increase in rent can affect whether they can go back into the CBD and whether they can trade."

She said some landlords had signalled they would work with their tenants to help them return to the city centre.

"But everything is such an unknown. I would love to go back into the CBD."

Matthews said getting businesses back into the CBD would take four or five years.

He said space would have to be used more efficiently. "Previously, there was a ratio of one person per 20sq m, but they will need to start to use less space per person. Rents will go up but the overall costs will remain the same."

He said a lack of demand from smaller businesses that could not afford new rents would eventually drive landlords to break down larger buildings into smaller areas.

Dacombe-Valentine had not been able to get an accurate idea of what the new rents would be. "We won't know until the building is built."

Pete Townsend, of the Canterbury Employers' Chamber of Commerce, said he did not expect all the small businesses that had been in the CBD would return. "Small businesses going back into the city need to remodel so they don't need the same footprint."

He said retail space would cost more a square metre but retailers could get around that by changing their model, so that only a limited amount of stock was on display and customers could browse the rest of the stock online. "Perhaps with a flat screen on the wall. People who change and accept the challenge are doing very well. Yes, it's going to be more expensive but it's a completely different economic environment. Those who understand that will prosper."