The challenges faced by CBDs across New Zealand

  • Property
  • July 14, 2015
  • Paul Keane
The challenges faced by CBDs across New Zealand

When is a Central Business District no longer? Two issues caught our eye over the past few days. The challenge faced by the Hamilton City Council in the wake of a declining CBD, and the development of the CBD in Christchurch in the aftermath of the earthquakes. The two cities have similarities, and there are further predicaments in cities and towns across New Zealand.

What makes a CBD is people and commercial activity of all shapes and sizes, not just retail outlets – in fact, retail in CBDs is not nearly as important as it used to be.

In days past, people visited the CBD to do business with key players, like banks, accountants or lawyers. This is no longer the case as these services are not as dependent on having a CBD presence. Instead their choice of location is driven by demand and access. Online activity has had a major impact on those divers, the need to physically visit a bank or lawyer to do business has decreased dramatically. For that matter, the personalities are not the same. Bankers and lawyers no longer wear ties or formal attire, they look like anybody else, so everything has changed.

Both Hamilton and Christchurch are going to find it hard to resurrect their respective CBDs, but for different reasons.

In Hamilton, commercial occupants have fled to the fringe areas of the city. Why should they come back and what is the motivation for them to do so? There is little motivation, and it is unlikely to see any resurgence anytime soon. The sell down of the Centre Place shopping centre, currently owned by Kiwi Property Group, will have a serious long term impact on the CBD, as a new owner will have its work cut out to make the development profitable and retention will be the key. Not easy, as we suspect the horse has bolted!

Christchurch effectively has greenfield CBD offerings available, and commercial and retail tenants are being encouraged to return. All of course based on the potential for success. The Government are assisting, with the introduction of Government offices being built to accommodate vast numbers of employees. The challenge for occupants, however, will be the support of new retail environments beyond the area settled by traditional retailers such as Ballantynes , who maintained their position and continue to trade very well. Driving around the Christchurch CBD remains a serious lesson in geography as to “where am I now” given the empty sites that still remain. Trusted locations like the Cathedral and the ex-BNZ building are dilapidated shapes ready for demolition at best.

So do we need these CBDs? Absolutely, they are the key to any city heart and produce the culture of a living city.

There was also discussion during the week about the collapse of the Rotorua CBD. We cannot fathom this. The city has added about 55,000 square metres of new retail space to its CBD through Rotorua Central, a modern retailing environment.

It may be that existing owners of buildings have failed to see the benefit of refurbishing in an effort to retain tenants. We suspect that this is the real issue for faltering CBDs. A good example is the replacement of Kirks in Wellington with David Jones. Just imagine what may have happened to that space if DJs had not come to town!

There certainly is a lesson here in that CBDs cannot afford to let the grass grow under their feet. They are an important part of everyday life and should be constantly resuscitated, to ensure longevity.

For more on this subject, take a look at this excellent report by the Future Spaces Foundation on the similar challenges that UK high streets are facing.

I am having a few weeks off to reinvigorate offshore. Visiting and experiencing some of the charming CBDs throughout Europe will be high on the agenda. Long may they last.

 Paul Keane is a registered property professional and has vast experience in New Zealand’s commercial property industries. He provides retail and property consultancy including development management to many New Zealand property owners, developers and city councils. 

This post originally appeared on RCG's blog.

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