HWCP Management Ltd property manager says old CBD buildings 'not attracting quality tenants'

Tuesday, 12 March 2019

Buildings along Tay St which are being proposed to be demolished to make way for a largely undercover retail precinct.

Invercargill's CBD will continue to struggle to attract quality tennants if a 'strip shopping format' remains in place, according to a property manager.

A resource consent hearing will be held on March 25 to look at HWCP Management Ltd's plans to demolish an Invercargill CBD retail block and build a largely undercover retail precinct.

The Tay St, Esk St block, bordered by Dee St and Kelvin St, is expected to include a range of shops, from a large anchor retailer to small boutique stores.

It will also include food outlets, offices, and apartments.

* Closure only option for some CBD businesses as relocation proves difficult

* Property developer Gaire Thompson wants building lease sorted**

Professionals commercial real estate agent Trevor Thayer, and property developer Geoff Thomson, have prepared a report ahead of the resource consent hearing.

Thomson is a director of HWCP, while Thayer is the property manager for the company.

The report outlines a lack of rental demand and old building stock in the Invercargill CBD at the moment. It also shares their thoughts as to why they feel the CBD development needs to get the green light for the good of the city.

'In its current format, the Invercargill CBD is not attracting quality tenants and that is not going to change with a strip shopping format,' the report says.

Thayer described a strip shopping format as retail spaces independently facing the street.

The pair believe quality retailers want to be linked to an anchor tenant in a building, which had quality parking.

'To adapt existing [Invercargill] building stock is not economically viable.'

The report points to the challenges commercial landlords have in renting out existing CBD buildings, despite landlords slashing prices.

It says the former Sass Cafe building in Esk St has been vacant for 18 months, despite it being marketed 'aggressively' at a 'competitive rate' of $18,000 annually. It was previously rented at $30,000.

'Not one offer has been obtained. When quality tenants call you, they quickly discover that there are few quality buildings they can occupy in the CBD.'

Other Esk St buildings, which the reports says has struggled to attract any tenant interest, include the 59 Esk St [corner of Cambridge Arcade], the former ASB building, and the former Southland Times building.

'Our old and heritage buildings are cold and expensive to heat and very expensive to maintain. As the rents have diminished over the years there is not the available surplus money for a property owner to maintain them, resulting the city becoming increasingly rundown.'

'The ability to start from scratch, with modern buildings constructed to 100 per cent [national building standards] … is the best strategy for the city centre to attract new tenants and to retain the existing tenants.'

Thomson is a Southlander who has 40 years experience in commercial and residential development projects throughout New Zealand, including in the redevelopment of a city block in the Exchange area of Dunedin.

He believes retail outlets which are not already in Invercargill will open up in the city if the new CBD precinct was in place.

'While there are empty shops in town now none of these are up to code. Our retail leasing consultant advises that over 50 per cent of the tenants in the mall will be new to town, and based on their experience they assure us there will be no problem leasing all the space in the mall in time,' Thomson said.

Commercial real estate company Colliers International is also working alongside HWCP and has also stated its case as to why it believes Invercargill is not appealing for retailers at the moment.

'The Invercargill retail CBD is currently very spread out and rather run down and disjointed. [It's] potentially unattractive to national and international retailers,' Colliers International national retail director Evan Harris said.

Meanwhile, Kim's Sunshine Sushi has announced that after 17 years it will close on Saturday after it was unable to find a new place to relocate to.

Kim's Sunshine Sushi is based on Kelvin St in the block which is planned for demolition.