Hobart is in danger of becoming the only capital city without a CBD according to the Property Council. 

The Lord Mayor points to a low commercial vacancy rate in the CBD to suggest the city is thriving but a low vacancy rate does not tell the whole story about Hobart’s commercial real estate market. 

The Mercury’s recent article Race for Space as City Office Market Thrives lacks the full context behind the statistics. The article quotes the Lord Mayor as saying, “many capital cities would be really envious of [our] very low vacancy rate.”

But I fear statistics got out of hand for the benefit of a grand narrative.

Seventy per cent of CBD offices are held by the State Government. A 30 per cent private occupancy rate does not indicate a flourishing private sector. 

While the government leases the vast majority of office spaces it’s very easy to point to low vacancy rates. However, the situation is so volatile that experts suggest that a single new development has the potential to create a literal glut of office space if planning is not carried out carefully.

If CBD office space was in such high demand surely newly released offices would be snapped quickly. So what is going on?

The State Government has increased its workforce by around 30 per cent in the past eight years. Despite many choosing to work from home, it is still increasing its need for office space. 

Now consider that the number of retail vacancies has increased significantly in the last 6 months as retailers struggle in the challenging economic climate. Real estate experts I’ve spoken to say it’s unlikely that it’s only retail that’s feeling the pinch. Wage increases and inflation combined with increasing interest rates is a harsh mistress.

Massive increases in construction costs also have to be accounted for. Developers will need to either add additional floors for office space or pump up their prices. If neither option is viable the development is unlikely to go ahead. 

Property Council tells us “Current market conditions are challenging and weakening to a point we haven’t seen in decades.”

The Mercury spoke to a software company that WAS thriving in Hobart with plans to expand and develop a larger premises, but to suggest that company is representative of all the city’s businesses is blatant gaslighting. Those who are working hard at the coal face know that sales are hard to come by and paying the rent is even harder.

There is a reasonable way to solve the issue.

We must create a strong business-friendly environment that emphasises access to customers seeking goods and services. This means improving public transport services and parking, and reducing traffic congestion. The City of Hobart has underperformed on these issues for years now.

The single advantage to locating a business in the CBD is accessibility to surrounding council areas. The appalling state of parking and traffic congestion in Hobart negates that advantage. Hobartians are traditionally happy to travel to the next council area to visit a business, but they tend to balk at going any further. For example, people in Kingston or Glenorchy are likely to travel to Hobart but far less likely to travel from Kingston to Glenorchy or vice versa. 

In the current times of tightening budgets, adding increasing parking prices (if you can even find a space) to the distance to travel, means more people will find local alternatives. 

Council planners tell us how “reducing cars and traffic increases business” but that’s not an honest assessment. They are not comparing apples with apples. They refer to case studies where there is abundant public transport, tunnels and traffic bridges that give pass-through traffic an alternative route. 

They tell us Elizabeth Street Mall and North Hobart Strip are thriving due to available car parking in close proximity. But these car parks are at capacity in the peak times. That should be the metric they use rather than the daily average, which is disingenuous at best, misleading at worst.

When a business struggles and closes our community loses more than just a place to shop. We lose access to businesses who rely on the advantages of the CBD to trial new products and services.

Hobart’s super-power doesn’t come from being small. It comes from being able to innovate in times of adversity. Consistently pushing customers away makes it very hard to innovate. With neighbouring council areas becoming more and more competitive Tasmania’s has less capability to adapt to change. 

This is why the Property Council says Hobart City Council “is making sure that Hobart will become the only capital city without a CBD."