Increasing confidence in Rotorua's business sector appears to be the driving force behind an eight-year low of empty shops in the city's CBD.

And that increased confidence may lead to further developments, those in the sector say.

There were 54 vacant shops in Rotorua's CBD in December 2017, compared to 65 in 2016 and 82 in 2015, the recently-released TelferYoung Central Business District Survey shows.

An aerial view of Rotorua, showing the CBD. PHOTO/ FILE
An aerial view of Rotorua, showing the CBD. PHOTO/ FILE

It marked the lowest retail vacancy rate since 2010, with occupancy at 89.3 per cent.


Office vacancy rates also reached their lowest level in three years.

The lowest vacancy rates in the CBD were in the Central Mall, Eat St, and on Fenton St near the I-Site.

Rotorua Central Mall and Tutanekai St were now the "prime retail shopping areas of Rotorua", having the highest pedestrian counts within the CBD, the survey stated.

"Overall, vacancies for retail space within the Rotorua CBD have decreased in the past year and over the same period there has been a large increase in new suburban retail shops, hence the results are even more impressive.

"These trends reflect the increase in confidence in the Rotorua economy and the strong tourism markets."

TelferYoung director Grant Utteridge said a combination of a strong economy, the tourism sector and the fact Rotorua "has really picked up its game", were contributing to the vacancy reduction.

There was also an increase in smaller businesses, he said.

According to the survey, personal and household service shops accounted for 29.9 per cent of tenancies, which was "quite a significant increase".


That was followed by cafes, restaurants and takeaways at 21.7 per cent, and clothing and soft goods at 11.8 per cent.

"As 2018 begins, confidence and demand still seems strong. The impact of the new Labour Government property policies will be watched closely. The opening of Kmart may also impact on CBD retail vacancies," the report states.

"The continued demand for A-grade office space may also promote future new development this year. An interesting year ahead, for sure, and we will be watching closely!"

Although there were fewer empty shops, Utteridge did not believe the CBD needed to grow yet.

"We've still got a bit of work to do."

Rotorua Chamber of Commerce chief executive Allison Lawton said the chamber was "thrilled" about the reduced vacancies, but there was more work to be done.

"At a Chamber Retail and Wholesale sector meeting held in December, this group was aware of the noticeable decrease in vacancy rates, now confirmed in the TelferYoung CBD report.

"Whilst they are very pleased with this result and trend, the focus and strategies are to identify and attract new high-value retailers and businesses into the CBD.

"Ongoing work is being done with this sector group to develop strategies and tactics to stimulate the right demand from high-value retailers and businesses to do business in Rotorua."

Rotorua district councillor and district revitalisation portfolio lead Karen Hunt said there was a "very positive" trend in the inner city.

"A key objective in revitalising the CBD was strengthening the 'spine' of the inner city, Tutanekai St, through projects like intersection upgrades and Te Manawa, so it's great to see the success of that reflected in these results," she said.

When asked about the availability of industrial land, deputy mayor and economic development portfolio lead Dave Donaldson said there were significant areas currently zoned industrial and the draft Spatial Plan had identified potential new areas.

"Council works with landowners to help them realise land aspirations, which could open up more industrial land, and staff work through options with landowners, developers and businesses.

"Our proximity to the Port of Tauranga and excellent connectivity generally makes Rotorua an attractive option for industry and available space is quickly being developed or redeveloped.

"We're also starting to see some industrial changing to commercial development such as the motel development on Fairy Springs Rd, Lynmore Junction and other sites. That's often beneficial in terms of reducing impact on urban areas."