Article: Property Investment
CBD & Online Relocation with Frank Newman
The sign in the window of a now vacant fringe central business district (CBD) store in Whangarei reads: “We have relocated to www………..co.nz”.
There has been some debate about the effects ecommerce may have on the demand for retail space. Some say the migration from bricks and mortar retail to online stores will have a melt-down effect on demand for retail space; others say it will have little if any impact at all.
There is no doubt online retailing is gaining significant traction, but It’s probably a bit early to tell what effect, if any, this will have on demand for retail space. Bricks and mortar retailing is getting harder and business owners are looking for ways to cut costs to compensate for declining sales - rent obviously features in that review. However, I suspect the move out of bricks and mortar to online will only occur at the margins, by small businesses that are on already at risk of closure.
Those who remember flyingpig.co.nz and ferrit.co.nz will know online retail is not easy either – it still requires a sound business model (good product, clear customer targeting, etc) and may require big spending on advertising to attract visitors to the site. That’s not to say there are no online retailing success stories – there are and for many full margin sales online are an attractive addition to their business.
While the heart of our CBD seems to be in good shape, there is no doubt the fringe areas have moved closer to the centre. While Whangarei has a large amount of bulk destination retail, in the absence of a Westfield type shopping mall, CBD retailers are providing niche retail.
As it happens the Whangarei District Council is seeking public feedback on its plans to add a bit of life to the CBD. Their initial proposal involves spending millions of dollars it does not have to extend the pedestrian mall along Cameron Street and down James Street. The full details will be on display shortly but one wonders whether councillors have not jumped the gun by dusting off a plan that has been sitting on the shelf for a while.
Perhaps Councillors should start by identifying the main reasons why the CBD is in decline. It may well be that lack of free and convenient parking is at the top of that list – in which case removing car parks to extend the mall is not smart thinking. Nor would it make sense to remove the hundreds of all-day car parks from the town basin area without an equivalent replacement.
The answer may be to think of the CBD as a large Westfield-type shopping centre and provide the very same facilities that they have clearly identified as important, things like:
• Ample convenient and secure parking.
• Free parking, at least for the first two hours (which would probably cost the council less than the interest on the debt it would need to borrow to do the mall extension).
• Dedicated car parks for families with young kiddies.
• Easy access for those with limited mobility.
• High standard and regularly cleaned conveniences and baby changing facilities.
• Fun things to keep young ones entertained while at least one parent is shopping.
No doubt local play centre groups and organisations like Greypower will be all too willing to provide their thoughts on what they believe to be the minimum standards, as will CBD retailers themselves. The council does not need to engage verbose and overpaid consultants to come up with what will be some clear answers.
In the main centres CBDs are becoming the hub for high rise central city living. That has spawned the nightclub and café culture as residents with no lawn to mow occupy their days socialising over latte and cake. Provincials town like Whangarei are likely to move that way too, but not for quite a while yet. Our CBD is likely to retain its predominant niche retail purpose and its battle with big box retail will go on for some time yet.
Frank Newman is the author of numerous books on investment matters and the creator of the NZ Investment Game which may be ordered at http://www.investmentgame.co.nz. He is a director of the accounting firm Smart Business Centre. He may be contacted at .(JavaScript must be enabled to view this email address).
