"I'm standing in the old Cheep Shop space looking at tens of thousands of dollars worth of damage caused by water leaks that have been ignored for years.
"At $115 a week, that's decades worth of rent to pay the repair bills."
A peppercorn rental refers to a token or nominal rent.
Hobson said raising the price on the space wasn't a money-making exercise.
The Cheep Shop tenancy was now on the market for around $500 a week, which he was told was still under the recommended rate.
"I'm OK with that. We aren't here to make a fortune, we are here to save the building.
"At that price we can pay insurance, rates and there's a bit left over to put back into it."
Shane Hobson in front of the Ministry of Works building on Taupō Quay. Photo / Bevan Conley
Developer Dave Moore, who is converting the heritage building at 6-8 St Hill St into apartments, said it was around 30 per cent more expensive to restore an older structure than simply knocking it down and starting over.
"The cost of doing up these buildings is also usually more than you budgeted for," Moore said.
"There are so many hidden faults and stuff you can't see that need repairing.
"It is very onerous in the sense that we have to lift all the compliance standards up to current legislation. A lot of it isn't tax-deductible either, unfortunately, which I think is irresponsible from the Government."
Moore said the space previously used by The Cheep Shop was big enough to accommodate three two-bedroom apartments.
"As I see it, the saviour of many of these [heritage] buildings is converting them to apartments.
"Obviously you would hope it brought people into the city and extended the nightlife. It seems to finish at about 8pm or 9pm as far as I've seen."
There are currently 363 items on the Whanganui District Plan heritage inventory.
Whanganui District Council heritage adviser Scott Flutey said people bringing heritage buildings up to code could apply for rates remissions.
"That way they can take down the cost a bit for upgrading and future-proofing their buildings.
"They can also go to the Heritage Grant Fund, which the council is widening in scope to make it easier to meet regulatory compliance."
One of the "killers" for meeting compliance nowadays was the fire rating, and the fund made allowances for that last year, Flutey said.
"Before you do any work you need a really detailed plan to take to council to get consents for.
"For that advice/design aspect, if your project is less than $15,000 you can potentially be refunded up to 80 per cent. If it's over $15,000, you could be eligible for a 50 per cent grant back."
Replacing a couple of studs in the wall of a heritage building could end up being all of them, Moore said.
"Those additional costs can be phenomenal. How do you recover that?
"Putting up rent is a double-edged sword. People, especially small businesses, can only afford so much for a tenancy."
Small businesses might decide to trade online rather than open a physical store because of the costs involved, Moore said.
Whanganui District Council heritage adviser Scott Flutey. Photo / Bevan Conley
Hadleigh Reid is responsible for the renovation of several buildings in the city, with the latest - commercial spaces on Drews Ave - nearing completion.
They will be filled by SourBros bakery and a dessert bar.
"It's tricky, because it costs so much to do these [buildings] up. Renovation costs aren't too dissimilar to a whole new build," Reid said.
"We had a cheap city with old buildings that hadn't been touched for decades, which were earthquake-prone. You can afford to charge really low rates.
"As we've improved things, it can't stay exactly like that."
The bank had financed almost all the projects he had undertaken.
"I've had to justify that to the bank, and ultimately that's about getting an evaluation good enough for them to be prepared to lend me the money and a return that's good enough to cover some of the repayments.
"It's a balance between making it viable for the tenants and viable for the redevelopment."
Hobson said a "historical aberration", where economic activity in Whanganui paused for a few decades, was one of the reasons the city had a large number of amazing old buildings.
"People like Ross [Mitchell-Anyon] had the foresight to buy these buildings, and then my investors have bought it off Ross to continue the story.
"Just about everybody is on the journey, we just need to make sure tenants are on the journey as well."
Pottery business Splatter Studios recently moved in on the ground floor at the Ministry of Works.
Instead of hiking the price, Hobson said he spoke to tenants about what they were willing to pay in rent.
"They understand their business far better than I do. If they've got a really interesting one, that's great. We aren't entirely focused on the money.
"We want someone interesting in here, trading five days a week and drawing people in, so that they create a connection to the building."
