Businesses need rent relief now
"The latest announcement from Government about support for business misses the mark on one of the biggest issues that have been raised with us during the lock down. It is not what we were expecting and it will likely have a detrimental effect on Auckland’s city centre,” says Viv Beck, Chief Executive of Heart of the City.
“While there are measures that will help some businesses, this will not get cash in the hands of businesses that desperately need money to pay for fixed costs like rent. Small to medium businesses make up 97% of New Zealand businesses and most do not have reserves to fund a Government imposed lockdown. In Auckland’s city centre, many businesses have been severely impacted by the impact of construction and expecting these businesses to survive a global pandemic without sufficient financial support is unrealistic. It is vital that businesses survive so there is a strong economic framework to build from beyond this crisis.
Not giving businesses additional support now when they need it most will have major consequences. Business failures will take a toll on the success and vitality of the city centre, which produces 20% of Auckland’s GDP and has an average retail spend of $5m per day.
Prior to the lock down, vacancy rates for both retail and office space were low. We’re facing a likelihood of that significantly shifting, with highly visible vacancies if the right financial support is not given. Based on more than 10,000 businesses in the city centre and estimating overall business loss at 10%, it could potentially mean 1000 businesses not surviving. Or, looking purely at customer facing businesses, an estimate of 20% closing could see 260 businesses close. This is indicative only but gives a sense of scale and the enormity of the situation.
The measures announced do not get to the nub of the issue between tenants and landlords. Discussions are vital so a fair outcome is achieved for both but there is no mechanism to work out what is fair in a situation like this. We had highlighted that this issue needs Government action as there is a major issue for tenants who can’t afford to pay their rent and also for landlords if rents are not paid. It is not fair to expect either tenants or landlords to bear the brunt of a situation that is completely out of their control.
The country can’t afford to keep pumping money out without a clear way to get the economy moving again and financial support must go hand in hand with a plan to achieve this. We need to see clarity on this in tomorrow’s announcement. In the week of 30th March alone, we have seen retail spending in the city centre plummet to $1.1m (on essential purchases), versus $26.8m in the same week last year.”
For further information or to arrange an interview with Viv Beck, contact
Heart of the City,
027 293 0835