Landlords are brokering deals to fill shop vacancies in Tauranga's struggling CBD.
In contrast, demand for commercial property in Mount Maunganui and the Tauriko Business Estate is soaring - with industrial rents at the Mount increasing by 15 to 25 per cent.
Data shows in September there were 506 occupiedsites in the city centre compared to 183 that were empty or under construction. In March 2019 those figures were 422 and 281 respectively.
Colliers International managing director Simon Clark said the CBD was struggling and landlords were coming up with creative ideas to attract tenants.
He said landlords knew the climate would change as multimillion-dollar projects like the Farmers building and a new courthouse came to fruition, so they were playing a waiting game.
''That is driving up rents significantly, we have seen industrial rent increases of 15 to 25 per cent at the Mount while Tauriko is similar but it has new builds coming along.''
Ray White Commercial managing director Phil Hunt said pockets of areas were going ''crazy'' and although there had been a lift of inquiries in the CBD, it was generally bad news.
He had been working with a prospective tenant that needed a substantial office and 10 car parks and they elected not to move into the CBD because of the lack of parking.
''Retail is dependent on the first-floor offices being occupied and unfortunately, we have got so many gaps and that is impacting big-time.''
Hunt said rents on existing buildings in the CBD were lower than they had been.
Ray White Commercial managing director Phil Hunt. Photo / NZME
''Some landlords are realistic and will help a tenant into premises and grow the rent with them. That should be applauded and how it should work but the new buildings are reflective of the build costs and most of the time discounted rents don't apply.''
Meanwhile, new industrial buildings at Tauriko are in high demand.
''It comes back to the economy of scale at Tauriko, there are so many businesses relocating there and the Mount industrial is also in huge demand if you can find a vacancy.''
Mainstreet Tauranga spokeswoman Sally Cooke said it was working alongside landlords ''to create opportunities for new initiatives to come into or stay in the city centre''.
These included the recently established Boho Store on Devonport Rd that sells native plant extracts and products and Remaker was securing a new space, in the Red Square.
She said unfortunately, funding for its Activate Vacant Spaces initiative had been canned by the council but Mainstreet Tauranga ''is determined to continue our work to contribute to the revitalisation of the city centre and the repurposing of vacant spaces for new initiatives''.
Tauranga Chamber of Commerce chief executive Matt Cowley. Photo / NZME
Tauranga Chamber of Commerce chief executive Matt Cowley said a number of people were downsizing tenancies and managing their overheads.
''Businesses are coming up with creative solutions, not only with staff working from home, but also keeping stock levels low and enabling for remote distribution. Fixed costs, particularly with fluctuating alert levels, are challenging businesses that require foot-traffic.''
However, it was difficult to run most businesses from home and it was unaffordable to buy your own commercial premises.
''There are few options, especially while council is running low of commercial and industrial zoned land.''
Retail NZ chief executive Greg Harford said a rent increase in the current climate could be utterly disastrous for a retail business.
''Many retail businesses are facing a bleak and uncertain future, and are really suffering from a drop in consumer spending and big increases in the costs of goods, freight and utilities.''
Restaurant Association NZ chief executive Marisa Bidois said businesses were already struggling and not trading at full capacity.
Revenue was reduced by 30-60 per cent at Covid alert levels 3 and 4 and 20-45 per cent at level 2.
She said it was not a good time to be implementing rent increases considering there was so much pressure on hospitality.
''Our preference is for landlords to take a long-term view and work with their tenants during these challenging times. We have definitely had discussions with members who have been in rent arrears and they are working through this with their landlords.''
Lots of landlords had stepped up and were being reasonable but not everyone has done that, she said.
Last month the Government introduced new rules to help ease the impacts of Covid-19 restrictions on commercial tenancies.
A clause had been added to the Property Law Act which said commercial leases requiring a "fair proportion" of rent to be paid where a tenant has been unable to fully conduct their business in their premises due to Covid restrictions.
Justice Minister Kris Faafoi said when tenants and landlords cannot agree on the fair proportion, they can go to arbitration.
"This change helps to ensure that landlords and tenants come to reasonable agreements about rent obligations, while still respecting agreements that have already been made.''
