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Smaller Gold Coast retailers blame high rents for growing number of vacant shops

By Jared Hodge

As many as one in five shops are vacant in parts of the Gold Coast, and some small business owners say it’s because they cannot afford to pay the rent.

Brian Marhaba has just closed his Italian restaurant after more than a decade serving meals on Broadbeach’s main drag, Surf Parade.

He said profits had declined significantly because of increased rent. “We have tried to negotiate rental assistance with the landlords over the past two years, but there has been none whatsoever,” Mr Marhaba said. “We’ve gone up from $240,000 to $320,000 a year.”

Mr Marhaba is not the only retailer shutting his doors. On his block in Broadbeach, five businesses are closed.

According to a real estate company, 10 per cent of shops on the Gold Coast’s main streets are vacant.

The rate is much higher for those off the main roads, with 20 per cent of stores empty.

Mr Marhaba said Broadbeach was not attracting the crowds to sustain the rent prices.

“There are a lot of excellent businesses that have been here for a long, long time. They have had a lot of great marketing campaigns and it still hasn’t worked,” he said.

“You’ve got some major players, for example Hogs Breath, that have closed down. The National [Australia] Bank has closed down.”

PHOTO: Brian Marhaba has recently closed an Italian Restaurant that he ran for 12 years. (ABC Gold Coast: Lucy Murray)

Why are vendors struggling to pay the rent?

A local real estate agent said retail was the only commercial sector struggling in the tourist capital.

Aged care, childcare and petrol station spaces are the best performers, with a vacancy rate just under 8 per cent.

But it’s a different story in the retail sector. He said retailers were being forced to compete with online stores, and could not afford to pay the rental rates wanted by landlords. “A lot of vendors increase their rents and unfortunately the tenants can’t afford to pay them, so they have to vacate,” he said.

The result? A lot of empty shops around Surfers Paradise and Broadbeach.

Should rental prices be dropped?

Gold Coast Mayor Tom Tate said some owners of older buildings were charging too much.

“With supply and demand, you’ve just got to meet the market,” he said.

“If the new building gives you a better offering, and your tenant tends to go there, you refurbish your existing property to bring it up to standard.

“Otherwise you bring it down to meet the market and give them some free rent, if the tenant is willing to do some fit-out.”

It’s a sentiment echoed by real estate agents.

A Retail Manager from a local real estate agency said upgrades to the Pacific Fair shopping centre had pulled retailers away from Broadbeach.

“They’ve added 50,000 square metres of retail space and that has created some challenges,” he said.

“They’ve pulled some tenants out of Surfers Paradise, particularly with the high-end fashion brands, Gucci, Prada, Louis Vuitton and also some restaurants have gone into the dining precinct.”

He said reducing rent would help to bring back tenants, but that landlords could learn from Pacific Fair and do renovations to attract retailers and customers.

“The old approach of ‘set and forget’ is quite rustic [and is] not working well at the moment.”

“Some clients are adjusting to the market, they are renewing their leases with a lower rent base, and sometimes they give tenants some incentives to stay, whether that is a rent-free period or a cash contribution towards a new fit-out.”

“We’re finding that the owners who are doing that are retaining their tenants and in the long-term that is paying off.

“The clients that aren’t listening to their tenants and are maintaining a high rent level, they are having their places vacated,” he said

The effect on retailers left behind

The other shops left in the area are struggling without the foot traffic.

Pharmacist Yusuke Satr works on a block in Surfers Paradise where almost half of the shops are closed.

He said one store closed a year ago, and the next one followed six months later.

“It just keeps happening,” he said.

“It looks really quiet at the moment. There are not enough shops. If there were a lot more shops, I think there would be a lot more foot traffic and there would be more business around here.

“When one shop closes, maybe another one opens, but then it will close and then the next shop will close and it has a snowball effect.”

Mr Marhaba said Surf Parade would continue to decline unless something was done.

He said diners wanted a good atmosphere, not empty shopfronts.

“Have a look at it, it is a ghost town,” he said.

“Why would you want to come to a ghost town?

“So many businesses are closed; there are only a few left. Why would they want to come to Broadbeach?” he said.

Source: http://www.abc.net.au/news/2018-06-10/retail-rent-prices-on-the-gold-coast-force-tenants-out/9850708

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