OVERVIEW
The latest Rotorua Central Business District vacancy survey has shown decreases in vacancy levels for both office space and retail space since 2020. The office sector vacancy rate has decreased to 14.6% from 19.3% in 2020. There is now 14,469m² of vacant office space compared to 2020 when the vacancies were 19,070m².
Within the retail sector, there has been only a slight decrease in both the number of vacant retail shops and the amount of vacant retail space. The retail vacancy rate is now 14.3% with 74 vacant shops, only three less than 2020. There is now 14,716m² of vacant retail space compared to 16,402m² in 2020.
RETAIL
After the initial lockdown in 2020 when the COVID-19 pandemic started, the leasing market weakened and vacancies increased, however in the last 12 to 18 months vacancy levels have slightly improved, although not by much. This shows that immediately after the pandemic vacancy rates rose but have now slightly decreased. There are now 74 vacant shops at a vacancy rate percentage of 14.3%, down slightly from 14.5% in 2020. This is still lower than the highest vacancy rates on record between 2011 and 2015 when retail vacancies peaked at 16.2%.
The highest concentration of vacancy measured in area is centered mainly around Fenton Street. Fenton Street has seen an increase from seven shops in 2020 to ten shops in 2021, largely due to the closing of direct tourist-related businesses. The highest level of vacancy measured in number of tenancies is located on Hinemoa Street and Pukuatua Street, where a large number of vacancies are located in the Royal Court Hinemoa Arcade.
Vacancy rates in the Rotorua Central Mall on Tutanekai Street have been relatively low with only one vacant shop compared to three in 2020. Tenancies at Rotorua Trade Central are not included in the survey. We have analysed the premises presently occupied based on the type of shops operating. The highest number of retail shops measured in tenancy numbers are for personal goods and household services, being 24.8% of the total number of tenancies. This is followed by cafes, restaurants, and takeaways at 21%.
OFFICES
The impact of the pandemic is not as pronounced in the office sector. This market is now showing moderate activity with the economy slowly picking up after the initial slump due to the COVID-19 pandemic. Supply is short for good quality, new space, but all other sectors are oversupplied.
The overarching trend is an increase in demand for good quality premises and very little, if any, demand for low quality or low seismic strength properties. Since the COVID-19 lockdowns, leasing activity in the office market has been sparse and vacancies have increased in 2020, however in 2021 leasing activity resumed with demand for good quality surpassing the pre-COVID levels.
The vacancy rate for offices decreased to 14.6% from 19.3% in December 2020. There were 66 vacant offices out of the 350 offices surveyed. The total amount of vacant office space decreased to 14,469m² from 19,070m² in 2020. Of note, it is apparent that there is a flight to quality with reductions in vacancy levels for Category A (good quality) space, and Category B (average quality) space and a significant increase in vacancy for Category C (poor quality) space, as illustrated in the graph on the right.