Empty CBD shops till end of year
Expect to see empty shops in the CBD until the end of the year as the newly declared recession bites, and help from landlords will be crucial to liven up central Hamilton, say city leaders.
The CBD retail vacancy rate increased from 7.9% in June 2023 to 8.9% in December, according to a report by NAI Harcourts and CBRE.
The 1% overall change is driven by more shops moving out of prime locations than shops taking them up, leading to a 5% jump in vacancies in top locales.
However, the vacancy rate dropped for both secondary and tertiary spots – down 0.6% for secondary and 2.2% for tertiary.
For those trying to liven up the city centre, it’s not easy to watch retail spaces in prime spots sitting empty for months and even years.
Hamilton Central Business Association general manager Vanessa Williams said this was because a lot of old, lower-quality buildings were still occupying prime locations.
Williams was not too concerned with the impact of a recession on businesses trying to open in the CBD, but said it would mean vacancy rates continuing to rise until the end of the year, before starting to drop.
NAI Harcourts Hamilton managing director Mike Neale has been matching businesses and empty spaces in Hamilton’s CBD for almost 20 years. Knowing every space inside and out, he thinks the CBD is in a much better shape compared to 12 years ago.
He also said it was unlikely the city would one day have a zero vacancy rate, but work could definitely be done to make the city more vibrant.
Neale said he understood that not all landlords had the budget to turn something plain into something like recently opened Hamilton East retail destination Made. But he was frustrated over landlords who weren’t willing to put in a small amount of work to make their buildings more attractive.
“If this was owned by Matt Stark, he’d be in here right now stripping it out here, painting it, doing something really cool,” he said of an empty space on Victoria St.
“Most landlords don’t do anything at all until they find a tenant, but sometimes you’ve got to do something to improve the appeal first.”
A lot of the spaces that have been vacant for a long time are often owned by out-oftown landlords. “The best owners are the people that live in Hamilton and drive past the building every day,” Neale said. “It makes you more likely to do things.”
There had also been a shift in demand for spaces, he said. Although large retailers had been moving out from the centre, smaller boutique shops targeting the centre’s young population had been moving in.
Neale revealed that incoming tenants included a candle making workshop, joining forces with existing retailers such as pottery, tufting, painting and sewing shops.
There were also simply not many companies that could fill a large space, he said. The recent move of JB Hi-fi left a massive 1434sq m on Barton St. The space was in a prime location, but there wasn’t demand for it.
“There might be 10 tenants around the country willing to look at this. When you’re small, there might be a hundred.”
To solve the problem, Neale and Williams said, there needed to be more creative solutions to these massive spaces, as it was highly unlikely that large retailers would come back to the centre.
Matt Stark, who was behind mind Made and other city rejuvenation projects, said another solution for these large ground floor retail sites was to turn them into offices.
Stark said he didn’t think there was a big enough population to support another Made, but there was still strong demand for offices in city centre.
Whether it’s food courts, pop-up markets, or offices, the city definitely need landlords.
Neale said he saw the recession announcement acting as a double-edged sword.
“I think two things will happen. Retailers pick up their games and think to themselves, ‘We’ve got to do a better job’. But it’s also an opportunity for new retailers to come in.”
It was also possible landlords might lower their rents upon hearing about the recession, he said.
A lot of changes happening in the CBD are giving Neale and Williams hope – for example, the Union Square office opening up in April, the theatre promising to be completed by 2025, a few new spaces Stark is working on, and some apartment buildings on the rise.
“I see the skyline changing,” Williams said.