Property Matters – 26 January 2018

Nelson CBD Retail Market

With respect to retail shop closures, the face of retail shopping in New Zealand, and presumably throughout the world, is changing due to the growth in online shopping and changes in technology. There will be winners and losers in this process and the change will be progressive. Larger retail stores will continue to prosper due to their bulk buying advantages while smaller retail stores, unless offering specialty products, will probably struggle to survive in the long term.

A comment in a recent Nelson Mail article (22 January 2018) on the state of the Nelson CBD, implied that Nelson retail rentals were higher than Queenstown. These comments were focused around the pending closure of Beds R Us and its relocation to Queenstown. We refute that Nelson retail rentals are above Queenstown when comparing the two centres’ central retailing areas and would speculate that Beds R Us are perhaps relocating to a more fringe business location in Queenstown and thus paying a lower rental rate for a larger area.

It is frequently suggested to us that valuers are responsible for setting rentals too high, whereas valuers merely analyse and follow rentals that have been freely agreed between landlords and tenants in an open market situation. We reflect the level of property outgoings paid by a tenant on top of their base rental such that a tenant in a single storied building paying a high level of rates would have a lower assessed market rental than a tenant in a multi-story building paying a smaller proportion of rates.

We would always suggest that landlords and tenants consult with us and seek advice on market rental levels and/or leasing terms and conditions before entering negotiations.

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