The claims about the health of Hobart's CBD flow thick and fast. So University of Tasmania's retail and consumer expert Dr Louise Grimmer has done a full diagnostic check.
I recently conducted my annual audit of Hobart CBD’s retail mix (the different type and size of businesses at ground level) and the number of empty storefronts (again, on ground level) in the city centre.
Commencing in 2020, these audits were part of concerted efforts by many to try and help local businesses survive the outbreak of COVID19 through encouraging Tasmanians to shop local and ensure small businesses could survive the unknowns of the pandemic.
At the time, I was interested in establishing a baseline of the number of empty stores in the CBD from which I could then compare future audits, track store closures and note trends in changing retail space use.
I was also interested in the number of businesses trading (some had temporarily closed).
The first audit in June 2020 showed a vacancy rate of 8.39% (with just under 90% of businesses trading); the second audit, later that year in November, showed the vacancy rate had dropped to 7.63% (with 90.9% trading).
Fast forward to 2023 and the data showed the CBD had a vacancy rate of 5.54%.
Practitioners and academics agree that a retail vacancy rate under 10% is no cause for concern.
There should always be some vacant units in any town or city to reduce barriers to entry for new businesses.
A vacancy rate of 0% would mean there is no opportunity for entrepreneurs, local businesses or national chains, to bring new retail stores and services to an area, and a concomitant lack of choice for shoppers.
Vacancy rates between 10% and 20% signal problems in a particular shopping precinct, and anything over 21% shows a precinct is suffering from significant economic, regulatory or other issues.
I follow the same methodology for each audit, using a defined area within the city centre, including arcades and centres.
My recently collected data shows an overall vacancy rate in the CBD of 6.83%.
This figure includes units that are either currently being refurbished or ‘under offer’ (therefore opening soon).
Taking these into account, the vacancy rate drops to 5.89%.
There has been recent commentary in both traditional and social media, that the city is ‘dead’ and there are ‘empty shops everywhere’.
I think it’s important to call out this false narrative and refute these claims with empirical data.
First, the city is not full of empty stores (the vacancy rate of 5.89% is healthy and allows for new businesses to enter the market).
Some vacant retail units are very large (and very expensive to rent) and these types of sites often sit vacant for long periods as larger retail chains negotiate with building owners – a process that can be prolonged by many factors.
Other vacant units are in prominent positions and are highly visible meaning these are the vacant sites people tend to recall.
When there are two vacant sites next to one another the perception of high vacancy rates in an area is also amplified.
There are also pockets along some streets, or in managed centres, with a higher vacancy rate than other areas, and this can skew perceptions about the number of empty shops.
I acknowledge there are vacant business sites on the outskirts of the CBD – this is always the case in cities and towns as these areas outside the core are less desirable for most retailers.
Vacancies on the fringe of the city should not be taken as an indicator of retail ‘health’ in Hobart.
Tasmanians are well-known for their habit of not traversing outside the centre of towns (!) and businesses operating in fringe areas often struggle with visibility and the ability attract foot traffic.
I spend a lot of time in the city and in other retail areas; I don’t believe the CBD is ‘dead’.
On the contrary, the data clearly shows that the city has a completely acceptable vacancy rate.
Yes, trading is tough at the moment (right around the country).
The key to ensuring our vacancy rate stays low, as we try to make our way through a challenging economic environment, is to support city centres and the businesses operating in them.
The winter period is always quieter for the retail industry, and this year its compounded by households limiting discretionary spending.
As we move into the warmer months and the lead up to Christmas, the way to ensure the vacancy rate stays low and businesses perform well is to support local businesses (wherever you may be).
This is the answer to keeping our towns and cities vibrant, welcoming and interesting places for everyone.
Dr Louise Grimmer is a retail expert from the University of Tasmania and runs the retail consultancy Shopology.