Sunday, August 17, 2014

Frank Newman: Revitalising the CBD

Central Business Districts (CBDs) are facing the challenges of change. People are changing the way they go about their lives and in particular how they spend their money. Many CBD’s are struggling to remain relevant against competition from big box retailers and as offices move to the cloud.  As a result the CBD is evolving as a place for small footprint boutique retailers, cafes, bars, restaurants and inner city apartment living.  That evolution is taking some time (decades) to work through but some provincial towns are taking the initiative by taking action now.

One I visited recently had just removed parking meters from its CBD. They have made parking free, with a three hour time limit.

It’s a simple thing for a council to do, but of course they need to be prepared to sacrifice the revenue stream the meters provide (although in truth they will simply load the lost revenue onto ratepayers). In fact, there is a lot local councils can learn from shopping centres about how to attract shoppers- free parking is a major one.

Free parking was also one of 100 ideas to come from a community brainstorming meeting facilitated by the Tauranga City Council earlier this year. The Rotorua District Council too has promised a comprehensive plan to bring life back to their listless CBD.

There are other things councils are doing besides making it convenient for shoppers to park. Some are relaxing planning regulations so conversion of properties to residential use can happen as of right, rather than through an uncertain and frustrating resource consent process that is about as welcoming as a tooth extraction, and a great deal more expensive. This is exactly what Melbourne City Council did to revitalise its CBD. It encouraged the conversion of old industrial buildings into new residential spaces by changing regulations, and improved the street level environment. As a result the number of residential units in Melbourne’s CBD population grew by more than 30,000 in just 15 years.

This sort of initiative requires leadership. Our local body politicians would need to give stronger guidance to staff about the approach they are to take. Unfortunately the vocal “we want things to stay the same” minority have been very good at pressuring council staff and councillors into putting roadblocks in the way of progress. That needs to change but will only change if there is a will from our elected representatives – and that can only come from the top.  There also needs to be a change of attitude:  Instead of regulation we need innovation; a can instead of can’t attitude; encouragement instead of discouragement; and more entrepreneurs instead of more bureaucrats.

CBD landlords too are being forced to adapt. They are reducing rents and becoming more creative about how they structure their lease arrangements. Some are abandoning the standard commercial lease that locks a tenant in for years by offering their space on a week by week basis to meet a growing demand from “pop up stores”.

Pop up retailing is becoming big business. There are a number of advantages for tenants.

It suits business unsure about the long-term viability of their business in a location.

It suits those who want to off-load stock at a location that is not going to compromise their existing outlet, or those who want to target a particular selling period e.g. Christmas.

It gives those with new products the opportunity to test the market response. Even existing bricks and mortar retailers are using temporary locations to test a new product lines and create some excitement.

It’s also advantageous to a landlord who would otherwise have vacant space that is draining cash from their bank account. Some real estate brokers are now catering especially for these short-term tenancies. Most pop up shop tenancies range from one week to two months.

Having real estate agents encourage pop up tenancies is good for landlords and another way of returning vibrancy to areas like the CBD.


Brian said...

Revitalising the CBD.
Excellent Frank, but our Councils are saturated with the idea that those so called rather boring Core Services they have to provide, do not present the image of Councillors with a Mana of distinction. My father (Engineer to a local Council) once said it was extremely easy to get a Councillors’ name on a new Council building project, but hard to get their name on the plaque of a new sewerage works!
Well after providing Ratepayers with new Velodrones, fancy sidewalks, harbour wharfs to satisfy the incoming tired tourist with picture of a New Zealand they will recognise from the brochures.
Then Yes, our CBD’s need upgrading, but Frank in view of your excellent idea of utilising and revitalising our old Victorian or Edwardian buildings (The provinces still have some left, but in Auckland and Wellington very few, this with Australian cities and towns) just how economic will this be?
Especially in view of this new safety law that demands strengthening old buildings to a Government “assumed” earthquake level of safety? ( I have yet to read of a building that has survived a force 9 plus quake)
In a country less committed to absolute socialism as New Zealand is, this idea of utilisation would lead to a new dynamic CBD; but with Councils more concerned with bureaucratic regulations, culture and hype, rather than with core services, I would tend to reserve my decision.
I would however raise a point. Have we reached a situation whereby Local Government has become merely an extended tool of Central Government? It is possible to have a smaller independent local authority coupled with a private sector, and governed by Company Law; especially in the field of financial spending?
Nevertheless your idea has considerable merit, but it needs Private Industry/Commercial & Business acumen to reach an accommodation and return back, lost ratepayers confidence.

Dave Hill said...

The big problem with small centers like Wanganui is that it has 11% of all NZs so called earthquake risk buildings. Being an old city with a slowly declining population the city has seen an exodus of Government branch offices and services that have now moved to larger centers like Palmerston or Wellington. Combine this with the down scaling of admin and retail plus the move to mobile or at home businesses and we have a new ghost town emerging. More than 80% of all office space in the city is now empty. So landlords have a choice upgrade earthquake prone buildings at enormous expense or bulldoze them down to empty parking lots. Even if CBD buildings were upgraded where are the new tenants going to come from.
Once vibrant small rural towns like Taumarunui, and Raetahi are now like western ghost towns and that effect is now moving to larger rural centers like Wanganui. With Governments sole focus on the two 'Rock star' economy's, Auckland and Christchurch the provinces are being ignored. Rather than build expensive Motorways and the huge infrastructure required in places like Auckland surely it would have been better to push development into provincial NZ where there is an abundant supply of cheap housing, industrial buildings and infrastructure sitting empty. Then that money could have been used to build innovation, health and education.

Dave Brown said...

Good ideas-better than sitting on your thumbs and watching the train coming!

Brian said...

Here are a few simple but effective solutions to the problem of an emptying countryside. Reduce Income Tax by 25% outside of the four main centres.

Reduce costs by excluding the RMA and other unnecessary (Green)bureaucracy from the country areas. Encourage private industry with special tax relief if they conduct their business/industry outside of the four major centres.

Whatever Political Party took this idea would then secure the Opposition Benches permanently.
Face up to reality, Auckland dominates and will only increase its dominance.
The rest of us will have our work cut out, just hanging on to its coat tails.