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EXCLUSIVE Shop Local! Warnings of disaster for Franklin Retailers. High Rents Blamed. It prides itself on being a boutique town with a unique country flavour. Shoppers travel here to enjoy the relaxed atmosphere, but Pukekohe is hurting as the economic downturn bites. With rents raised to match the buoyancy of the past two year boom and new businesses still prepared to pay for a niche in the popular shopping centre, existing retailers are feeling the pressure. Local retailers consider their futures as rents rise “I feel that the town has been overly hyped and real estate and developers have got carried away in Franklin. Now with the economic downturn, small businesses are suffering with increasing costs across the board and trying to live with a decrease in turnover,” says one long-time business owner, who did not wish to be named. “Most businesses are on a two yearly rent review – my rent has increased by 80% in six years, the last rise was late last year. Landlords hike up the rent when times are buoyant, but now businesses are closing, some are downsizing into smaller premises, trying to handle the rent. Discussions with landlords don’t always help. Mine said if I wouldn’t pay, he would easily get someone else in who would. This kind of response is changing the face of Pukekohe town centre, threatening long term tenants and encouraging an influx of discount shops. The same thing happened in Papakura 20 years ago. There was a lot of redevelopment in the town centre, rents went up through the roof and good, quality businesses closed down. The town was left with empty buildings and discount shops. I am very worried because that is happening now to Pukekohe.” Franklin is not alone in the commercial rental blues – similar rent crises are happening in the main centres, where lease agreements are based on buoyant times and may be weighted in the landlord’s favour. Rents peak when landlords offer new tenants ‘sweeteners’ for an initial honeymoon period, but down the track, 16 Support your local business www.elocal.co.nz a new inflated price kicks in. These high prices are then used as a benchmark as market indicators when other leases come up for renewal. Combine that with a drop in turnover, and it spells trouble for retailers in small towns like Pukekohe. Overseas, retailers are working together to seek rent reductions, but in New Zealand, it’s the luck of the draw for small business owners. Some shopkeepers with local, well established landlords speak of fair treatment and regular conversations with their landlord. Their relationship is more a partnership to mutual benefit. It’s a different story for those with buildings not owned locally, and those whose landlord increases rent and won’t enter into discussion. “My rent went up by 20% at the end of last year – it usually goes up by 3-5%. This is just ridiculous, if business was increasing it wouldn’t have bothered me too much, but this is a time of decreased sales for many shop owners,” says Kay Thomas from Delightfully Different. “I feel rent is getting up to Auckland levels, but we don’t have the same foot traffic. When I took over the shop I had to completely redecorate and there were repairs needed that are still not done. High rents are being paid for new businesses in new buildings in town, but mine is an old building and there’s no comparison. My landlord hasn’t responded yet to my request to discuss the rent increase with me.” Kay added that she had been planning to take a day off a week by employing someone in her shop, but the wage for an assistant has had to go toward paying the increased rent. She goes on working hard without a break and a local job is lost. “I like to donate to local community groups like schools, and will continue to do so. But I feel like asking people to get donations from my landlord – he is just as much a main-street business and should be contributing toward our town. Businesses are closing. It’s sad if people who come to Pukekohe for its interesting little shops find a whole lot of empty shops instead.” Another small business owner decided to pull out when a lease renewal came with a rent increase: “Auckland shoppers love my shop, but to cover the rent increase I would have to try to make more money. It was just too hard, so I’m closing down. I don’t mind paying a fair price but it’s just ridiculous. This is Pukekohe, not Parnell or Newmarket. I’m in a good location but there’s no hot water here and the building leaks. Why should I pay top market rent when I don’t have a brand new building?” Hardeep Bola of Columbus Coffee doesn’t personally know his landlord, his premises are leased from an out of town trust, which hit him with a big rent hike last year after the initial ‘sweetener’ period had ended. “Income is going down while rent goes up – the economy is going backwards, but it’s a matter of landlord greed and wealth versus the small business retail in New Zealand. Retailers are the mainstay of our economy and it’s hard to see shops empty. There was a factory locally where the rent went up – now it’s empty. That hurts both parties. Retailers need to meet their landlords eye to eye. In this climate, we all need to help each other, but some don’t want to talk. Pukekohe was labelled a growth area and these landlords are still trying to take advantage of it. If I didn’t have a ratchet clause in my lease agreement, I would have been completely pillaged by now. Pukekohe has a lot of potential and I don’t want to see it becoming a discount store town, no longer a boutique destination.” “Over the last couple of years there’s been a huge rental increase in the town centre and I’ve had concerns for some time that they got just too high. We are seeing the effects now, with the downturn in the economy,” says Greg Hicks, president of Pukekohe Business Association. “PBA is very serious about maintaining the unique nature of the town and at the Landlords’ Forum last year asked
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