Turning cities into ghost towns
Published in Insights, The New Zealand Initiative’s newsletter, 28 August 2020
Walking around central Wellington, more shops are boarded up. On Lambton Quay, two bank branches recently disappeared. Just as the two Burger Kings on Lambton Quay and Courtney Place. Walking down Featherston St, there are empty shops every 40 or 50 metres.
Reports from New Zealand’s forbidden city, formerly known as Auckland, sound even more alarming.
Where Wellington’s economy was cushioned by steady public sector employment, Auckland felt the brunt of a private sector contraction and now another lockdown. A quick online search of advertised retail premises returned 122 listings in Takapuna alone.
Covid-19 is not the sole cause of this pain. Consumers were already banking using apps, shopping on Internet platforms and buying insurance without face-to-face contact. No wonder insurer AMI, for example, is closing all its brick-and-mortar stores.
The pandemic is accelerating these developments. OfficeMax this week announced shutting all their 14 stores in New Zealand. This follows The Warehouse Group closing six stores and jewellery chain Michael Hill three outlets.
Before the crisis, New Zealand retailers had an average margin of just 3.7%. It does not take much to push these businesses to the brink. Greg Harford, chief executive of Retail NZ, estimates that the second lockdown reduced retail spending by 40% nationally and 80% in Auckland.
He added that a quarter of Retail NZ’s members are not confident or unsure they will survive the next 12 months. That is roughly 6750 businesses.
As inner-city retail struggles, so does hospitality. It is not just the international tourists that are missing. With dying shops around them, people working from home and incomes falling, fewer people are dining out. Add to that another lockdown and this is a death sentence for many bars and restaurants.
No-one knows how long this Covid-19 disaster will continue. But we can already see the scars the virus will leave.
When this public health emergency ends, New Zealand will look different. Gaping holes will exist where there used to be shops, bank and insurance branches, bars, restaurant, jewellers, electronics shops and department stores.
To avoid creating ghost towns, we must find a way of saving lives without destroying the cities they inhabit.