The struggle for businesses in downtown Auckland looks set to continue with a business leader saying the demand for office space could reduce significantly.
COVID-19 has seen people working from home to help stop the spread of the virus, but this has also taught businesses to become much more flexible with where their employees work.
Head of retail and metro at commercial real estate services company Jones Lang LaSalle (JLL) Nilesh Patel told AM the current vacancy rate for the Auckland CBD is sitting at around 13 to 14 percent.
He warned "a lot more issues are coming" as businesses start exploring their options with many currently trading at a loss.
But he is "optimistic" that it could change, with restrictions continuing to ease and tourists arriving back in New Zealand.
Auckland Business Chamber chief executive Michael Barnett told AM with businesses more flexible with where their employees work, it will see far fewer people in the CBD.
"The demand for office space is going to reduce and I would predict, yes there will be a lag, but a year out from now, the demand is going to be 30 percent less than what the demand is now," he told AM.
Barnett said with fewer people working in the office, businesses are going to be after a different type of space.
"That's going to impact on leases, it's going to impact on values and I think it's also going to impact on the sort of space people want," Barnett said.
"They won't want the cube farms they've had in the past, they will want more space, as I said it's going to be a very different environment in the CBD."
With people continuing to work from home even as we move through the COVID pandemic, businesses are considering shifting to the suburbs.
"A move to the suburbs means cheaper rents. A lot of operators that have been traditionally in the CBD are looking at suburban areas to halve their rent," Patel said.
"They are looking at reduced footprints in terms of tenancy size so I do think there will see a shift to the suburbs."
Patel said the key for businesses in the Auckland CBD will be the return of tourists. Currently, only Australian citizens can come into New Zealand quarantine-free, but from May 1, visa waiver tourists will also be allowed into the country.
"In my opinion, the CBD thrives off tourism, so once you've got the people coming off the ships, people taking public transport coming out of Britomart train station, that's really going to be the opportunity for retailers to thrive," Patel told AM.
One issue retailers in the CBD could face in years to come is the lack of car parking.
Auckland Transport (AT) released its draft parking strategy last month - proposing 1200km of Auckland's main roads lose their car parks in favour of transport infrastructure, footpaths, mobility spaces and bike and bus lanes over the next 10 years.
"I don't mind if they're taking it [car parks] away from outside shops but they need to replace it and replace it nearby," Barnett said.
Watch the full interview with Michael Barnett and Nilesh and Patel above.
