Hastings occupancy rates were 3.6 per cent lower than six months ago with the worst affected area the third Heretaunga St West block, where 23 per cent of floor space was vacant in February, 2015.
Hastings Mayor Lawrence Yule said he met the block's retailers on Thursday.
"We have ended up with a perfect storm, with the size of the Hastings CBD too large and the advent of falling national numbers," he said.
There was a need to "narrow down" the retail precinct, preferably without zoning changes.
"That's what we have been trying to do with the call centre-type options. That's the solution in the long term."
He said in the 1960s and 1970s Hastings was a very popular destination for shoppers throughout the region. The current oversupply was a result of other retail options improving.
As the economy lifted there would be an increase in retail demand, but online shopping would take an increasing slice of the market, he said.
Rezoning Nelson Park, to become a large-format shopping precinct anchored by The Warehouse and Mitre 10 Mega, was not a mistake because a large format centre between Napier and Hastings "would decimate both CBDs".
Hastings City Business Association Chairman Michael Whittaker said the oversupply was "the new normal".
"There is no point in hoping it is going to go back to how it used to be," he said.
Council plans had not taken into account rapid changes in retail and the CBD needed to be "reinvigorated with change".
"Maybe change of use is the way to go. It is time to stand back and look at the bigger picture - what Hastings could look like in the next 5, 10, 20 years."
The Christchurch earthquake "struck the whole of New Zealand", changing building rules and regulations, but regardless of seismic issues Hastings had "real issues to deal with".
"Something needs to change."
Ideas needed to be bold "and maybe a little more bold than the council and council officers will come up with in the first draft".
"The worst thing we could do here is tweak the rules - this is an actual fundamental change for Hastings. This is a once-in-a-lifetime opportunity to make a Hastings for the future."
Napier, Havelock North and Taradale occupancy rates improved, in the past six months according to a survey. Napier's was up 1 per cent from the previous six-monthly survey in August.
Napier City Council member Tony Jeffery said his city was "looking good" in the survey, but the earthquake code was "a bigger impediment than the economy" to filling empty shops.
"The big issue is not the economy. It's seismic issues. A lot of these shops are empty because you can't change their use until you bring them up to code."
Mr Jeffery said the earthquake code would need to be addressed at Government level.
Wairoa Mayor Craig Little said the town was trying hard to rejuvenate its centre so more people shopped locally.
Central Hawke's Bay Mayor Peter Butler said Waipukurau's main street had already experienced a change in use, with many offices present.
Some large retail spaces were empty "which makes it look worse than it is".
Waipawa was booming. It was being compared with other bustling State Highway provincial centres, such as Otaki and Tirau, thanks to support from passing motorists, he said.
"There is not an empty shop - Waipawa is on a real roll."
