Retail vacancies at 20-year high

HIGH PROFILE: Rotorua Central mall is one of the central locations where retail vacancies tend to be low.

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Retail vacancies in the Rotorua central business district are at their highest level in more than 20 years.

 

The 2011 Rotorua Central Business District Vacancy Survey by Telfer Young - formerly Reid and Reynolds - shows vacancies at 14.5 per cent or 77 units. This is the highest level since the survey started in 1989.

Co-author Kendall Russ said the completion of the Royal Court Apartments and the resulting 28 new Hinemoa Arcade retail units was the main factor in the jump up from 51 vacant shops in 2010.

"Were it not for the development of that site, it would appear retail vacancies would have been similar to the 2010 results."

The vacancies make up 15,871sqm of space - up from 14,438 in 2010 - with the lowest vacancy rates in high profile locations such as Tutanekai St and Rotorua Central Mall, Eat Streat and in the tourist area at the north of Fenton St.

"There are limited vacancies in prime sites - they are all out on the fringes."

Russ said Hinemoa St continued to have a high vacancy rate following the movement of New Zealand Post to Pukuatua St and empty shops did affect rental and property values.

"You do see higher rents in Tutanekai St and the Mall. Demand does influence rents and that, in turn, influences value."

The Telfer Young survey covers the area between Ranolf, Amohau, Fenton and Whakaue streets and along Lake Rd. However, in a separate survey of suburban shopping areas, outside this central business district, vacancy levels dropped from 10.1 per cent in 2010 to 9.6 per cent, with very few empty shops in popular locations such as Ngongotaha.

In terms of use of CBD retail space, little has changed. Personal and household services made up 22.2 per cent of the shops, followed by restaurants and takeaways on 20.2 per cent and soft goods shops at 13.9 per cent. But the survey shows personal and household stores are now occupying smaller floor space, while clothing and soft goods now take up more space.

Russ said these findings reflected moves by many businesses to smaller, more affordable premises.

Telfer Young's Grant Utteridge has been involved in the survey since its inception and said vacancy levels did tend to rise and fall in cycles, but not with any particular pattern or regularity.

"The reason we started it was largely because people were making intuitive guesses about what was happening with vacancies. Now we have data that tells use what actually is happening."

Utteridge said there had been a surprising drop in vacancies between 2001 and 2005 - surprising because it was the time Rotorua Central mall opened.

"They have climbed quite dramatically since then."

While the survey looks at changes, without drawing conclusions or making forecasts, he said it was possible to see the impact of certain events and developments in the data. He put some of the increase in vacancies since 2005 down to businesses looking for ways to cut costs and the more flexible work arrangements possible with new technologies.

With more people working from home or remotely and online shopping taking its toll on retail, Utteridge said many firms did not need such large premises or such central locations.

"There are not just one or two reasons."

But he said vacancies levels definitely rose when economic conditions were tough.