For property investors, pedestrian counts reveal more than just how many feet are on the pavement outside their building.
Observing trends through time can provide insight into changing consumer behaviour, reveal investment opportunities and potential challenges for those looking to purchase in the CBD
Provincial CBDs throughout New Zealand have generally observed a pattern of decreased foot traffic over the past decade. In Tauranga, for example, the 2019 pedestrian count shows a 15% decline from 2017, which was 11% lower than the previous count in 2015.
Typically, the amount of pedestrian traffic reflects the amount of potential trade for businesses, and the exposure they'll receive.
As a commercial property owner, if your tenants’ profits are flatlining or declining due to decreased foot traffic, your investment is likely decreasing in value too.
But these statistics don’t signal the end of the provincial CBD
Rather than steering clear and missing opportunities completely, Paul Higson of TelferYoung Tauranga believes that investors should instead use this information to make forward-thinking decisions about which properties will be in demand – and how to make their spaces more appealing to retailers.
Find out how you can plan for the future when investing in the city, and how to get the best value for your investment.
To address the issue of falling pedestrian counts, you have to understand what’s driving the trend… but it’s not exactly simple.
Developments over the past decade in how we work, live, travel, and shop have irrevocably changed our behaviour. These developments are diverse, ranging from online shopping to the creation of mega-malls outside city centres.
While no one factor alone is responsible for falling pedestrian counts, there are several interrelated reasons behind the trend.
A myriad of reasons contribute to reduced pedestrian counts, which — if not proactively checked — can lead to disappointment for commercial property owners.
Over the past decade in Tauranga, rents on commercial properties in the CBD have barely risen. Compare this to other retail areas in the city, which have seen 15-20% growth in rental rates, and it’s clear to see the CBD is missing out on substantial growth.
At first glance, investors may be put off by this dispiriting prospect, but Paul Higson isn’t discouraged:
“With CBD assets, you have to be more proactive as an owner. It’s not like a passive investment in a mall or industrial property. In the CBD you have to be willing to make changes, to grow.”
- Paul Higson, TelferYoung Tauranga
His primary recommendation for commercial property owners is to think about how a given property will be in demand and what potential it carries for the future. The demands of 20-30 years ago are no longer relevant, and owners must be future-forward with plans if they are hoping to see growth.
Observe the burgeoning trends for central city spaces worldwide — like creating green spaces that pedestrians want to be in — and evaluate whether these are achievable or realistic for your space.
Experienced valuers, like our team at TelferYoung, have their finger on the pulse of the commercial investment industry to know what businesses are performing, what may be a good use of a particular space, and how rents are tracking in a certain area.
We can advise commercial property owners on which sectors — and what sub-sectors within those — are performing the best
If offices are performing well in the CBD, we’ll help you to break down the benefits between investing in a big or small, modern A, B or C grade office space.
We’ll guide you through your options for converting ground floor space into different retail or experience premises
Some ground-floor spaces may be appropriate to adapt differently in the future, to capitalise on growing trends and demands.
We work with you to find a commercial investment property that’s suited to your needs and capabilities, based on historic and current rental trends
You may be excited about investing in a property, without realising that rents aren’t growing or changing — unless you do something about it.
Higson likens the CBD to a giant cruise ship: the hulking size giving it momentum in a single direction, and it takes quite some effort to turn, but when it does turn it powers ahead wherever you steer it.
His is an optimistic view, open to the exciting future that developments in the CBD can bring.
Posted 7 months ago