Nelson’s central city landlords are calling out the council after taking the blame for empty shopfronts when they say it is rising commercial rates that are the culprit.
A drive by of the central city shows that businesses are feeling the pinch of winter as more than 30 shopfronts are now sitting empty.
“The extremely high rates paid by commercial properties put additional pressure on our inner-city retailers and businesses who already struggle with seasonal fluctuations, competition from online entities,” says property owner Wendy Reeve, who submitted to the council on her concerns.
“In order to maintain the vitality of our CBD, we need to be doing everything we can to support their success.”
The Hardy St retail premises that Cache will soon be vacating is up for lease at a cost of $59,000 +Opex +GST per year.
To make this space work the business would have to make about $186 of sales every single day of the year just to cover rent.
That’s not including insurances, wages, power and, of course, the stock itself.
This does not include the “Opex” which usually includes council rates, water and building insurance.
The outgoing manager of Cache did not respond to requests for comment.
Regional councils charge their rates differently, Tasman District Council charges on the capital value of a property, whereas Nelson City Council only charges on land value.
For example, a commercial property on Queen Street with a capital value of $1.77million pays commercial rates of $9217 per year, compared to a $1.58 million property on Trafalgar Street which is charged $17,952 per year in rates.
This Nelson property would need to bring in an extra $50 every day of the year just to cover the rates.
One shop owner, who did not want to be named, says that their rent of $2500 a month is fair but it is the added costs of paying $900 in commercial rates each quarter puts added pressure on the business.
“You think you’re on top then every 12 weeks you get an extra bill that is essentially half of your rent again.”
Commercial property owner Susan Lane echoed those concerns and also called for a reduction in rates.
“The rents are driven by the owners’ costs, not just ‘greed’ for higher rent,” she submitted to council. “And these costs are passed onto the tenants, therefore affecting their running costs and viability. We would like to do anything that can keep the central area vibrant and humming with successful businesses.”
NCC communications manager Paul Shattock says that ratings on commercial properties is something that has come up in the Long-Term Plan that came into effect last week and the plan seeks to address this issue. In the council’s LTP consultation document it proposed reducing commercial rates by between 1 and 2.5 per cent.
In Nelson small businesses employ the bulk of our residents. There are 1377 businesses that employ between one and 10 people in Nelson and just 36 businesses that employ 100 or more according to Ministry of Business and Innovation.