The Tauranga CBD. Photo / Andrew Warner
They're the city's mega-malls and they have grown hugely, offering not just shopping but a dining and entertainment experience.
But what does the growth of Tauranga Crossing and Bayfair mean for the city centre?
In the second of a two-part series on the rise of the malls, Zoe Hunter investigates the impact on the CBD and finds out how retailers and the city's leaders are responding and what the future holds.
It is mid-morning on a Saturday in Tauranga's city centre and there are few shoppers around.
I've just come from the hustle and bustle of the city's newest mega-mall at Tauranga Crossing where almost every store has a waiting customer.
It's the same at Bayfair Shopping Centre, where many people are shopping and dining inside the enclosed mall.
• Read Part One: The rise of the malls: How the face of shopping has changed in Tauranga
I can see the odd person in the CBD with a shopping bag in hand, but it appears they are on a mission with their heads down and walking at a fast pace.
Scaffolding is up at almost every turn and orange road cones block entrances to some of the streets.
In the heart of the city centre sits the new Waikato University campus which many people hope will inject new life into the CBD.
The massive Farmers building is taking shape on Elizabeth St, promising to deliver 8000sq m of retail on two levels, 23 townhouses and 96 high-end apartments in two towers, plus 322 car parks.
Under pressure from the malls which are expanding their footprint and drawing more shoppers, Tauranga's CBD is in the middle of a period of upheaval and transition.
Empty shops are visible, with signs up for lease - but the cafes are busy with people sipping on their morning coffees and having a bite to eat.
Empty sites, less money
Downtown Tauranga's data shows of the 704 sites in the CBD, 550 are occupied and 154 are available for lease.
The figures only relate to the Mainstreet boundary and not the full CBD as defined by the Tauranga City Council, which stretches from Second Ave to Monmouth St and from Cameron Rd to The Strand.
So let's do the maths.
Downtown Tauranga's chairman, Brian Berry, uses this example: If we allow a rental rate of an average of $250 per sq m (across retail and office space) and an average tenancy size of 125sq m that equals $31,250 a year across 150 vacancies.
That's a total of $4,687,500 in potential lost rental income.
Add an allowance for operating expenses (rates, insurance and other costs), at $40 per sq m and that equals $750,000.
That means the total lease and operating expenses being missed out on is about $5.5m, plus any further spend associated with the tenant, staff and customers, Berry says.
It is a challenge long-time retailers in the city centre are trying to overcome, with talk of late-night shopping to bring back customers.
Retailers and a late-night option?
Murray Clode, of Macandmor Art Space in the Goddards Centre, is one of the retailers involved in discussions for late-night CBD shopping.
"Our challenge is to make the CBD still interesting and engaging to the people and give them some reason to come in to do their shopping or for a social experience," he says.
Opening later would attract people who want to shop after work, combining shopping with the social experience of going to dinner and the movies, Clode says.
"It is really around giving another future to the CBD," he says.
Clode says the later hours until 7.30pm or 8.30pm will be trialled for "a considerable amount of time" and will be up to the individual businesses.
Bill Campbell, owner of gift and souvenir shop Fancy That, says CBD retailers have been complaining about malls since he opened his store 11 years ago.
"It hasn't got any better," he says. "It is unavoidable. Tauranga's population is not growing enough to be able to accommodate new malls and have the CBD running the way it was previously."
Campbell says the biggest problem is people still have to pay for parking.
"They can go anywhere else they want to in the whole city for free and the poor old customer in the CBD has to pay. That is probably the biggest downfall of all, and we are short of parks."
Then there are the empty shops.
"We are surviving but every time another mall starts up the spiral starts again, we just lose more shops," he says.
Campbell had a souvenir store in Bayfair for about 12 months about six years ago, which didn't work out.
"We had to staff it full time, seven days a week and we realised it wasn't the right demographic for our product," he says.
"We have to be in the city centre because that is where visitors go."
A changing trend
Downtown Tauranga chairman Brian Berry says the CBD is slowly transforming into a business hub.
Berry says to cater to an increasing population and a societal change towards experience rather than purchase; the retail sector is seeing a growing emphasis on hospitality.
"Retailers of products need to transition from offerings that are directly competing against the suburban shopping centres, to provide a more advice-based shopping experience via speciality shops whose products and levels of advice are unavailable in the big malls," he says.
Priority One projects manager Annie Hill says Tauranga is following an international trend towards CBDs transitioning from retail destinations to more mixed-use areas.
The area is now driven by office-based businesses, residential accommodation, education, entertainment, events, professional and personal services, hospitality and arts and cultural offerings, Hill says.
"We have seen a trend of professional services firms moving back into the city centre," she says.
Staff want access to more activity and amenity options, including cafes and restaurants, boutique retail, the Tauranga waterfront and easily accessible green space, she says.
"The retail offering in the city centre is also transitioning and is being largely driven by the requirements of those that work or live in the city centre."
Construction
Berry says the CBD has been under pressure for several years due to the proliferation of suburban shopping centres but, most recently, due to construction in the area.
"Understandably, foot traffic numbers are challenging at present due to access and circulation issues within the CBD as it transitions into a dynamic business, hospitality and education hub," he says.
Berry says developments and streetscape improvements in the CBD and the increase in residential living - such as the 119 apartments in the Farmers development - means short-term pain for longer-term gain.
"Reflecting the growth of population and in business, the city is transitioning from being a small provincial city to one of being a true business hub, that is of national importance," he says.
"The best thing that the Tauranga community can do is to come into the CBD and see what is happening, what the offerings are, and support businesses that are feeling the short-term pain of this transition period."
Hill says the city centre is transforming with about $350m in developments under way or planned in the next few years.
"Increasingly businesses are seeing the city centre as the place to be in terms of maximising their exposure," she says.
Our Place had brought more people into the city centre, and the recently-opened university campus and the $130 million Farmers development would be game changers for the CBD, Hill says.
What does a city centre offer that a mall doesn't?
Berry says the city centre provides the option of a more rounded shopping, entertainment, dining, cultural experience that is not available in the bigger malls.
"We have multiple food and hospitality options delivering quality and offering that is generally not found in the large malls," he says.
The city centre also offers an art gallery, Baycourt performing arts centre, Event Cinemas, the Trustpower Photographic Exhibition downtown, cruise ship shuttles, the Tauranga Waterfront and the opportunity to discover Tauranga's history at The Elms and Redoubt.
Hill says the city centre provides a much broader experience than malls that are primarily for retail shopping and grabbing a bite to eat.
As well as the waterfront and access to green space and cultural activities, the city centre is also a significant education precinct with a boutique range of retail outlets, she says.
Employment growth
The latest Infometrics data shows show employment growth in the city centre is 5.5 per cent, and Gross Domestic Product (GDP) growth of 7.6 per cent.
Hill says those figures are well ahead of the national average and even higher than for Tauranga city as a whole.
Business growth has also been strong in the city centre, increasing 4.4 per cent in the last year.
"These businesses provide high-value jobs, with the professional, scientific and technical services industry grouping the largest contributor to GDP," she says.
"More than 55 per cent of businesses in the CBD have at least a quarter of their staff with tertiary degrees and over 30 per cent are in management or professional/technical roles."
'The future is bright' say real estate agents
Ray White commercial and industrial specialist Philip Hunt says common complaints from tenants thinking of moving out of the CBD are road closures, parking and construction.
"We have got this current pain with large amounts of vacancies," he says. "The golden mile street of Devonport Rd is no longer."
Hunt says construction on significant developments is driving people away from the CBD, but things could be worse.
"These are just growing pains. In the late 1990s we had a real problem with first-floor office space being very poorly tenanted," he says.
Now, he says many commercial tenants are operating in offices on the first, second and third floors - and most of them are service businesses.
"They are the future of the CBD. These service businesses and offices are the lifeblood of the CBD going forward," he says.
"We are going to become a very strong commercial centre."
He suspects the CBD will see a "remarkable turnaround" in about 18 months and applauded the retailers who were "riding it out".
Head of the Bayleys Tauranga commercial team, Mark Walton, says the future is strong for the CBD with key projects like the Farmers building and the University of Waikato.
"In three to five years it is going to be big," he says.
"The regional suburban shopping centres are having a bit of a honeymoon period. There is still a lot of confidence in the CBD."
Walton says many tenants in the CBD have been there for 20 to 30 years, but younger investors also saw potential in the area.
"There is still demand for those older obsolete buildings that people can purchase and renovate and attract tenants," he says.
What our city councillors think
Tauranga mayor Greg Brownless says malls are popular due to their consistent opening hours.
"We don't have that in the CBD. That is up to the individual shop owners," he says.
However, he says opening later at night could help to attract more people to the area.
Brownless says the only construction in the CBD that was led by the city council and had closed roads was the car park building, "which people are crying out for".
"Like anything, there is going to be pain in the meantime," he says.
"Even though the retail has dropped, the place is still buzzing. I think it [the CBD] is just different. Competition is competition."
Councillor Terry Molloy says Tauranga has an exciting future but is going through a transformation.
"We are on the cusp of a major change. We are setting up the city for the next 50 years," he says.
"It will be the civic, cultural and business centre of the Western Bay, with city living, exciting new amenities and our relationship with the Waterfront, it's the place to be."
However, he says metamorphosis is not without pain that shouldn't be carried by a few for the benefit of many.
"In encouraging development, we have reduced parking stocks to a critical level," he says.
"This creates a significant problem as we transition to other modes of transport."
Molloy says significant changes will happen in the next eight years. "For now we need to encourage the CBD businesses, to continue their investment. It's vital."
Empty businesses in the city centre represented millions of dollars of losses.
"We need to provide more support to help fill those spaces," he says.
Businesses are struggling with construction sites with many under development, which is causing peak hour traffic, reduced parking, and road closures or restrictions.
"Add to that a falling foot count over the last three years and the need for action is obvious," he says.
"We need short-, medium- and long-term solutions. Long term is looking good, short-to-medium needs urgent work. We need simple objectives. Easy access, a welcoming environment and to provide a great experience."
Molloy suggests free buses into the CBD, finding opportunities for a park-and-ride, providing shuttle buses around the city centre, free parking, a review of the cruise ship shuttle, new transport initiatives and filling empty shops were possibilities for immediate help.
Mount Maunganui/Pāpāmoa ward councillor Leanne Brown says the role of city centres is changing everywhere.
"Research shows that our residents prefer to shop in their local neighbourhoods and communities rather than go to their city centre," she says.
But the role of retail in the city centre is to provide a great shopping experience for the 12,000 people who work in the city centre as well as visitors.
"It is the civic, cultural, commercial, and to some extent, the entertainment and hospitality hub of our whole city," she says.
How are our mainstreets affected?
Brown says Downtown the Mount is quite different to all other neighbourhood centres and the city centre, offering an exceptional range of boutiques and unique shops.
"It has a sophisticated yet casual vibe," she says.
Brown says both the city centre and Downtown the Mount play different roles.
"We need an active, attractive and vibrant city centre because it is the heart of our city," she says.
"But we also need to leverage off the uniqueness of Downtown the Mount and the national and international reputation of Mount Maunganui, Mauao, and its great beaches."
Brown says the city's three mainstreets - Downtown Tauranga, Greerton Mainstreet and Downtown the Mount - have their own personality, a more relaxed space where locals often have a sense of belonging.
"I don't believe malls can offer this, and nor should they. They have their own role to play in the retail world," she says.
"Downtown the Mount is special to locals, so it will hopefully always be 'the destination of choice' and the place where we take our visiting friends and relatives for a local experience."
What the shoppers think
"It is a shame really because this is dying off, isn't it? I feel so sad for all these shop owners because some of them [shoppers] will go into those big shopping malls, but that's the way it is now I'm afraid," Ōhauiti resident Ann Andrews says.
"I think it is with these shopping malls, younger people like all of the razzmatazz and the children's play areas and all that."
Andrews believes the CBD is dying off because shoppers are now more attracted to shopping malls.
"It is a shopping experience isn't it going to the big places like that," her husband, Paul Andrews, says.
CBD shopper Rueben Kelly prefers to dine at a restaurant or cafe outside in the CBD rather than in a shopping mall.
"It feels nice, there is fewer people," he says. "But parking around here is pretty average.
"Trying to find a park in town, no way. And you wonder where all the people are and the vehicles, it makes it hard."
What do you think?
What's your view on the rise of the malls? And what do you think the CBD and council need to do to attract more people?
Have your say by emailing editor@bayofplentytimes.co.nz. Please provide your name and suburb. Responses may be published.
Jefferies and family will enjoy a leg of lamb with summer sides.