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The shopping strip effect

Angela Catterns
Friday, October 02, 2015

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By Angela Catterns

In any given week, the busiest shop in my local suburban shopping strip is the active-wear shop. Every Sunday morning they hold a free yoga class and it’s chockers!

Fit young things are crammed in side by side on their rubber mats in neat rows, slotted in between the racks of fluoro lycra and moisture-wicking spandex. The downward dog was never meant to be performed in quite such close proximity.

Nevertheless, the free yoga classes breathe life into the shopping strip at a time when many of the other shops are either empty of shoppers or completely vacant.

It’s become something of a sport to walk along the main drag and count the numbers of empty shops along the way. In some places there are four or five empty retail premises in a row, the only items in their front windows are large ‘For Lease’ signs.

Why this thriving suburb of 11,000 residents can’t continue to support a thriving shopping strip is a complete mystery to me. Real estate is booming, the schools are full, there are big residential developments selling units off the plan as fast as hot cakes.

And yet, the shopping strip appears to be dying.

Word is, there are a handful of landlords who own much of the strip and the over-priced rents they charge have forced shop-owners to close down and either move elsewhere or get out of retail altogether.

It’s a familiar story in suburbs and towns all across Australia.

Holidaying this week in my favourite sleepy coastal town I was sad to hear the news that the local hardware store is soon to close. Part of a line of six shops all owned by the same landlord, the hardware shop is set to go the way of the butcher and the cake shop, which closed their doors a few weeks ago. The hardware man has done well to compete with the massive tool barns 30-odd kilometres away. He told me about the local builder who shops there several times a day in search of the right nuts or bolts. Imagine the driving he’ll have to do once the hardware store closes its doors for good.

The owner of these shops is not charging higher rents in the context of a booming commercial property market. He’s decided to increase the rents and if the current, long-term tenants can’t afford to pay and are forced to move out, then the owner can simply negatively gear the place, write off the running costs and depreciate the building.

It may be tax effective for the owner, but it leaves a massive hole in the heart of the community.

When these small commercial tenancies remain empty over a significant period of time, it makes a town or a suburb look like it’s dying. The community value of the local shopping strip is something of enormous value. But today, shopkeepers face massive pressure from the big shopping centres, which now try to mimic the main street shopping strip in an attempt to create a ‘town centre’ sort of vibe. Online shopping is another threat and in some cases, so is the local Council.

Across Australia, communities have formed action groups and put together various initiatives to try and stop the decline of the local shopping strip.

Business associations have come up with strategic visions in the hope of reinvigorating the main street. Some councils have come on board and implemented plans to support their main street businesses to ensure that they thrive and prosper. There are pop-up shops, free parking, even free buses to take locals to and from the shops. Not to mention free yoga classes!

But in the end, if the rental costs for these places don’t drop to allow new tenants to move in, they’ll just remain empty.

And when an empty property is tax effective for the owner, where’s the incentive for change?

Published: Friday, October 02, 2015

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