Merimbula now has 15 vacant shops, but whether it is a sign of the times or something that landlords should address through the rents they charge depends on to whom you talk.
The last six months has seen shops close in several of Merimbula’s arcades and side streets as well as Market Street and Main Street, with one shoe shop moving to smaller premises on Market Street. The large retail space that Heelz with Style previously occupied remains empty, after it was vacated in spring 2011, and Don Peterson, principal of Fisk and Nagle, Merimbula said that he’s never seen so many empty shops in the 12 years that he’d been in Merimbula.
Mr Peterson said that there had been “minimal enquiries” for the Heelz shop. “I have never seen so many empty shops and without any national traders looking for space either,” he said.
“Rents are extremely high for the main strip and some landlords are looking to address this. There is provision in lease agreements for increases each year but some are choosing not to apply increases.
“Empty shops are an indication of the market. Retailers are struggling against online purchases and they are competing against national traders in the new centre at Bega which has had an impact.”
Property manager at Merimbula Real Estate, Helen Stewart said: “It’s retail all over but maybe it’s time for some landlords to look at rentals in order to keep their tenants. It doesn’t look good for the town if there are shops empty.”
In December 2010, Barb and Mike Aggenbach closed the shop they had run for 14 years, Video Ezy, Merimbula. Originally the shop hired videos and then moved to DVDs.
Mrs Aggenbach said that things had taken a turn for the worse over the previous 12 months and admitted that the business had suffered from changing technology.
“Although the internet has had some effect on trade, the free to air TV channels now nine (will reach up to 16) has definitely affected us.”
But she also said: “Our rent has also affected us making it impossible for us to continue.” She said that the rent increased by CPI every year. “When we started we could manage but over the last few years the cost of running the store has gone up and takings haven’t.”
In a letter to the News Weekly, Wednesday January 4, Mrs Aggenbach said: “If rents continue to be so exorbitant in Merimbula there will be many more stores empty and will deter anyone wishing to start any new businesses in Merimbula.”
Not surprisingly landlords disagree that rents are too high and say that annual increases in line with CPI are the norm.
Landlord Robert Green said that rents vary all over town. “Within our shops, rents range from the cheapest at $250 per square metre to the most expensive at about $475 per square metre. Across the road, close to the water, they may be a good deal higher.”
A 10m by 10m retail space at $250 per square metre will cost $25,000 a year.
In a letter in response to Mr Green’s submission on the Draft Bega Valley Local Environmental Plan2010 and Draft Bega Valley Development Control Plan 2011, councillor Michael Britten, who is also a landlord, said: “The rents in Merimbula range from $250 per square metre per annum to $600 per square metre per annum, plus or minus outgoings. Properties owned by Mr Green and those owned by Claire Amundsen and Colin Meares would be at the top end of the range.”
On top of rents are wages and utility bills although some landlords include outgoings in their rents. In some cases rents may have been set by valuation some years ago and increased by CPI each year.
Mr Green said: “Rents are only part of business overheads. Wages would usually vastly exceed rents. The sort of business being operated is also a big factor.
“What I have found is that retailers in small shops which are not on the main street will struggle. In order to be successful, ‘arcade’ tenants need to be in the business of ‘adding value’. Tenants who use the location as a place to run a business, like hairdressers, cafes, optometrists, agents, picture framers and so on will do well. Other tenants in the arcades who have a small shop from which they merely retail goods made elsewhere will struggle.
“So if a business fails it is not likely to be because of high rents but more likely because of a poor business model or a lack of prior business experience by the business owner,” Mr Green said.
Mr Peterson said that when times are tough, retailers have to put more effort in their business and must adapt to changing conditions. “Sometimes that means getting smaller or even getting bigger in order to survive,” he said.
The pressure on local retailers hadn’t been helped by the arrival of two large Woolworths’ developments at Bega and Tura Beach. The Tura Beach complex has taken its toll on the previous Tura Beach shopping area and Mr Peterson said that now “no trader will go there” and he called it “an absolute disgrace”.
Mr Green said: “The picture is more complicated than just rents. The factors which affect retailing in Merimbula certainly include rents, but to isolate rents as a factor is misleading because it ignores much bigger issues.
“Wages, weekend loadings, internet trading, the loss of a supermarket from Merimbula, the inability of any owner to get approval to build a new supermarket in Merimbula, the new retail complexes in Bega and Tura, the state government’s decision to have all public servants located in Bega, the decision to build the new regional hospital in Bega and council’s decision to reduce its presence in Merimbula are all factors.”
Mr Green said it was not it is not all gloom and doom though. “Several of our existing tenants have extended their leases for five years.”
But as the summer trade draws to a close there are suggestions that retail businesses may face challenging times as they battle online sales, national traders with large buying power and an increasingly conservative shopping public looking to wipe debt off their credit cards rather than add to it.
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