There’s a clamour from retailers for government (you and me) to subsidise their shop rentals.

Justice Minister Andrew Little said, “We’ve heard the calls to subsidise rent or to freeze rents. However, both of these approaches would have meant commercial property owners would have had their income protected at a time when no-one else enjoys that privilege”.

That of course is true, however, Andrew should note no lessor is asking him to do that. Instead, I suspect I’d speak for most when I say they’d rather the government stayed out of interfering with clear contractual relationships. Let’s look at this in detail. First, there’s many types of retail property.


Shopping centres are mostly owned by public companies. They are dumb investments.

The smart money got out a few years ago as the evidence became increasingly clear they’re doomed, notably because of the growth in internet shopping. That said, some are still flourishing but trust me, within a decade they’ll be dead in the water in an age of rapid change, and worth only their land value.

That said, who owns their owners, as I said, most being public companies? Primarily their shareholders are investment Funds, providing retirement incomes for ordinary folk. Almost certainly major Government Funds such as the ACC for instance will be among their shareholders.

Managing a large shopping mall is a complex expert business. The placement of shops is a critical factor.

If for example one wanted to start a stamp and coin business, they would not entertain it. In short it’s not simply a matter of leasing vacant space but instead leasing it to the right activity and operator in the right position.

It’s part and parcel of managing a shopping centre to have tenants regularly in trouble for all sorts of reasons. A dress shop owner might buy the wrong designs, a mild winter will leave a retailer with unsold winter clothing and so it goes.

The Mall owner will then come to an arrangement with the tenant to nurse them through the crisis. This is an everyday part of managing a large shopping centre and does not need government involvement.


Conventional High Street retail is doomed. The sole exception are prime CBD shops simply because of the large number of pedestrians.

My company owns the most CBD shops in Wellington because we own the most prime CBD office buildings.

Again, as with shopping centres there are constant situations arising in which retailers get into difficulty.

If it’s a one-off financial hit for some reason or other, we will suspend rent for say 3 months then spread its repayment, interest free, in small supplementary payments thereafter.

That in fact is precisely what we offered most of them long before the lockdown arose but when it was evident things were going to get tough.

The subsequent lockdown foolishness by the government and their wage subsidies, and now further payments under consideration, should not be seen as subsidising landlords, as Andrew Little has said. Landlords are well versed in dealing with retailer problems and don’t need the government’s intervention.

Aside from that, why pick on them? Why not demand the shoe shop’s suppliers provide stock at half price, so too the electricity supplier, the rating authority and so on? Politicians and public servants are not au fait with these issues and should stay out of it.

A final thought on prime CBD buildings is as with shopping centres most are owned by either public companies or Funds, their ultimate ownership beneficiaries being mum and dad superannuant savers.

These are the people hurt by unnecessary clumsy government intervention.

My company, is the largest NZ privately owned CBD building owner but we’re oddities outside of the capital. There’s a higher degree of private ownership in Wellington than any city I’m aware of in New Zealand, Australia, Britain etc. That’s because of misplaced earthquake concerns, but that’s another issue.


These are invariably owned by mum and dad small investors. Investment is about trying to read the future. These owners are not investment sophisticates and will all ultimately get burned.

Currently half the world’s population live in cities. Projections are uniform worldwide that this will rise to 75% in another 25 yrs.

In its wake will be ghost towns full of empty shops. You can see that already when driving around New Zealand, but it’s the same situation globally.

Small investors are sucked in by the cheap entry price and high yield, both factors which should ring alarm bells.

But note this.

Our principal newspapers at least twice weekly run 2, 3 and sometimes more full pages display advertisements listing many dozens of small commercial and industrial buildings for sale. These days a high percentage are located in doomed provincial locations.

You will rarely see a main city offering and the exceptions are nearly always dogs. Top major investment buildings that come on the market are never advertised as there’s no need, commercial agents knowing who their buyers will be.

But also note this. Outside of the Sydney Morning Herald Saturday edition you will not find such advertising anywhere in the world. In short, the desire to own commercial property is a New Zealand peculiarity.

There are literally several hundred thousand commercial buildings in New Zealand. 99% of them represent bad investing and constantly declining value. That said, it’s a totally improper use of government money to prop them up.

My company both here and abroad were eligible for salary supplementation during the lockdown. We wouldn’t dream of taking it because we can afford not to, so too many of the parasite larger outfits the press have been exposing who joyfully put their hand up.

Conversely, we don’t want the government interfering in our handling of troubled retailers. We are well used to that. When trends change such as for example the now troubled dress shops, we release tenants from their obligation and don’t pursue them in such genuine hardship cases, notwithstanding personal guarantees.


I bought my first retail building way back in 1962. Over the subsequent years I’ve owned over 1000 retail premises in over 50 cities in five countries.

There was a time when this was smart investing. It’s certainly not now.

But here’s the puzzle. Over those near six decades we’ve experienced heaps of occasions when lessees have sought rental reductions, sometimes backing such pleas with their accounts.

But never once in those six decades has a retailer come to us and said we’re doing an awful lot better than anticipated. Please can we have an increase in rent?

How do we handle these? Simple. We tell them if they can’t crack it then see a commercial leasing agent who will find a replacement lessee, as provided for in their lease.

I say it again. The government’s unfamiliarity with the commercial world has seen them make some hugely unwise steps, splashing money around willy-nilly.

There will be a time of reckoning for them and the nation and it doesn’t auger well.




Perhaps the Gummint could buy up all those unwanted commercials and use them for “Emergency Housing” Half of them would be very handy to a likker store or takeaway.

    Between Airbnb’s caving and commercial adaptions – despite the abysmal prospects there could be a glut of residential supply in the near term. Might well seesaw up commercial demand as a consequence.

For crying out loud ! Jacinda’s government is unhinged commercial. Why you’re vote for her is beyond me. It appears all they can do is throw taxpayers money around, including what they can borrow to throw around to sure up the economy. But when I think about it, most voted and wanted National to form the 2016 government. That said. I’m in favour of tenants and landlord forming whatever agreements they wish to arrive at a mutually beneficial position to move forward on, and not more welfare that a socialist government would want to hoist on all and sundry.

As for the death of shopping malls: people are social animals. They (we) like to congregate which by and large means the ‘mall rat’ will be well fed provided the offering has a good size food court and a few specialty restaurants.

As for the suburban or outer shopping centre main street shops, they will struggle to get tenants of longevity and will eventually be taken over by free loaders as is happening in parts of Naenae by the looks of things.

To put it succinctly , market forces will always prevail.

Valcorza Realty May 3, 2020 at 4:55 pm

I have a mixed primarily office property in central Tauranga and I’m aware of properties that used to be owned by Bob in the area.
I’m curious if Bob still has any vested interest in this city or if he sees it as dead along with the rest of the provinces.

At risk of sounding sycophantic, that sounds like (uncommon?) good commercial sense. On one point (“Never once in 6 decades has a retailer said we’re doing better than anticipated, can we have an increase in rent”), years ago I managed major litigation for a big corporate. I introduced value billing where I did just that, often. On one job I asked the firm to add $250k to the bill. It went both ways. I recall one advice ($20k ‘time’), hedged with “if and buts” and stamped “draft”, where I said I’d pay the full value it offered me the day before I was due to advise CEO. Already filed in the bin. (To their credit, they then actually advised). The best thing was we all focused more on what mattered, and countless legalistic arguments disappeared, allowing us to resolve disputes faster and cheaper. I wasn’t trying to save costs, but we shaved a couple million p/a, by paying lawyers more. We also used lessons to strip out corporate legal risk across the Group, paying them more again, and saved millions more. I can’t say it was plain sailing (some lawyers hated it), but leasing is a relationship game too, and maybe some could save/earn more by paying more rent, and maybe (stunned/impressed) landlords will help find them exceptional places for expansion, etc, enabling more profitability. Ditto government procurement rules, there’s huge scope for better outcomes for govt and better long term sustainable relations with vendors and I’ve been asked in a few times, but vested interests and locked-in thinking just lock-in the usual nonsense. As it did in the construction industry. As it still does in many of the all-of-government procurement deals. Absent public sector vision magically appearing one day, there’s more opportunity for better solutions for both parties in private sector, but in leasing your example suggests NZ is still in the dark ages, so, probably pie in the sky thinking today, as it was then. But it works.

Why do people not get price controls never work? They are counter productive if anything. But that’s typical of government interference for you.
Maintaining good relationships is critical in any endeavour – they can benefit from compounding perhaps more than almost everything else.

I have never settled what to make of the point that the rest of the world apparently has a different attitude about property than us.

Will be interesting to see how the likely short term deflation shifts things. Though I think inflation will ultimately prove a bigger role in the long term.

    Also the growth of cities has followed a classic power law type distribution. This event is the first thing that’s put any sign of a dent in that eventuality.

Bob you are the most SENSIBLE BUSINESSMAN in this Country i have so much Respect for what you say and write my Wife and i run a small landscaping business in Rotorua for 16yrs we are back working now for all our customers except for three oh well i Suppose we have been lucky with these customers who are wealthier business clientele some Rotorua and a couple Wellington any way Bob keep Blogging Thankyou

I’m a residential property investor in Central Wellington, an industry where we have been subjected to government wankers and busybodies for years now. Some things have been good like the healthy homes bill but others like the 90 day notice period and threats to throw out fixed term tenancies have been utterly ridiculous. So much so I’ve toyed with the idea of turning all of my investment flats into stand alone houses and selling them to rich buggers in the likes of Mt Victoria just to prove a point. That way I could kick out all 24 tenants and replace them with owner occupiers who would probably number a paltry dozen and rob young twenty somethings the chance to live in a premier location.

The government should govern as hands off as possible, not interfere with everyday commerce so that it strangles it with rules and regulations disadvantaging both parties. They seem to think we are all children, or deaf, blind and incapable of living our own lives.

Aaah. But do you have any ADSL fair abatement leases. “Fair abatement” is a very hard concept for both parties to grasp. Perhaps a dilemma for your flat earth lawyer mates to figure out? At a huge cost of course.

These views are so 2010s.
The first thing the government will ask is – are your lease agreements kind?
Suffice to say, I suspect that the government will decide that they are not kind.
The next question the government will ask is – is it fair that your company owns all these properties?
Homeless people don’t own any properties, and yet you own many.
I suspect that the government will say that this is not fair.
You could end up like poor old Peng Dehuai commenting like this…

    Nobody is forced into signing a lease, both tenant and landlord make a commercial decision after taking whatever advise they deem appropriate. As is the cae with almost all contracts, once signed the parties have a right to expect they are honoured.

I agree with this. Rents will drop all on their own if the money on the ground level can’t support them. The government should stay right out of it. But I think your long-range city projections on city growth might be wrong, due to powerful disruptive technologies.

The heart of what drives people into big cities is the lucrative labour markets. But what happens when the agglomeration dynamic is comfortably replaced with the cloud, for over 70% of job and more? And indeed, the supporting technologies for this are growing.

My bet? It’s going to be all about lifestyle in the near-enough future. People are going to flee to a beautiful home, in a beautiful climate, with a really nice lifestyle. And the smart money is going to be in ‘exotic property development’, with large-scale private villages meeting the all-important social need (your kind of people and no gangs, etc). I won’t be about access to a job, so much.

I wrote on this, if anyone’s curious:

The key point is.. “why landlords, why not any other supplier” because ultimately that’s the rub. No one wants or deserves to be the mug taking the big hit. A bit like tax I suspect. In which case the government clomping around in their size 15’s really won’t solve anything. It’s up to the parties involved to work out their arrangements.

Bob, Bob. “Who their buyers will be.” Use of “who” as an object and ending a sentence with a preposition. Surely you mean, ” Whom will be their buyers.” A bit clunky I accept, but standards please.

The commentator says he’s still to experience a tenant telling him, “we’re doing better… can we pls have an increase in rent”.
What a silly (read stupid) thing to say. Of course he hasn’t had this said to him. Any sane business person wouldn’t give his profits away -especially for say a fixed two year term during which his/her profits may turn again -not to mention to someone like Jone’s who regularly regurgitates in some way utterances on his financial strength and solid returning investments.

    I think the point was that those tenants never offered increased rent in their good years (as they shouldn’t) but they are now claiming discounts after one or two bad months

Perhaps you could explain why you think earthquake concerns in Wellington are misplaced.

    Alastair Gustafson May 4, 2020 at 6:56 pm

    Hi Ben. Did you get an answer. I was about to post the same question. I really want to know.

The whole show is propped up on more and more unpayable debt. Real estate prices are so far removed from reality, it’s like discussing a occultist theory of a theory of a theory. Until a family can afford a home for 2-3 years of average salary, we have been complicit in creating a problem for the future. It’s asking why we care more for our rental return on capital, than our grandkids ability to raise a family. There’s an element of scaling back expectations. Pretty sure that getting the state to play real estate fascist god is a really bad idea.

Hello Bob. Big fan. Where can I please buy your book “Biografi: An Albanian Quest”? Much thanks! Mirupafshim! – Klajdi

If you have (near sea-level) commercial property in Wellington it will decline in value,… forever.

The U.S. Geological Survey people claim that;

The Greenland ice sheet melting will raise sea-level 6.55 meters (21.5 feet),
the West Antarctica ice sheet melting will raise sea-level 8.06 meters (26.4 feet),
the East Antarctica ice sheet melting will raise sea-level 64.8 meters (212.6 feet),
and all other ice melting will raise sea-level another 0.91 meters (3 feet).

For a grand total of about 80 meters (263 feet).

So, what does an 80 meter (263 feet) rise in sea-level mean. Have a look at the following map of the world after an 80 meter rise. It means that over one billion people will have to be resettled to higher ground and that much of the most productive agricultural land will be under water. Fortunately, at current rates, the Greenland ice sheet will take over a thousand years to melt and the Antarctica ice sheet, much longer. However, the greater the temperature rise the faster the ice sheets will melt, bringing the problem much closer. Remember, the huge ice sheet that recently covered much of North America, almost completely melted in only 15,000 years (today, only the Greenland ice sheet, and some other small patches of it, remain). Since then (15,000 years ago), sea-levels have risen about 125 meters (410 feet), only 80 meters to go.

If you have commercial property in Wellington this will be a big, big problem.

It will cause valuations to drop more quickly than the sea-level will rise.

Have you heard about this?

The Prime Minister has excelled in her role as a Health and Safety inspector. I think this is mainly due to her amazingly elastic face, and her excellent utilisation of this talent to pull sad faces. She is able to gurn in such an extreme manner that gullible people believe she is emoting with them – or even for them.
Of course, you can be a halfwit and issue these health and safety notices. Actually, being slightly mentally defective probably helps, because you don’t tire of babbling the same tiresome drivel again and again.
The interesting thing about having zero cases of this nasty flu is that eventually the focus is going to change. The safety blanket of babbling health and safety messages is going to be rudely ripped away.
At this point, the Prime Minister will need to face questions about the economy. Pulling funny faces might work with a health scare, but it is unlikely to impress during economic collapse.
Of course, the Prime Minister is completely out of her depth on economic matters. The average 12-year-old child could sustain a better conversation about economics.
I suppose she will just palm off the questions to someone else, which will be a shame, because listening to her babbling drivel about economic matters would have been amusing…

    Is this a precis of your letters to one of the mainstream publications , or news outlets , that turned you down for publication CakeFace ?
    Hmmm , I wonder why ?

Bobs views seem a bit one sided here. One reason tenants don’t ask for rent increases in good times is that they don’t need to – landlords build regular rent reviews into the lease and insist on making sure the lease says the rent can never fall, even when the tenant is now undeniably paying more than market rate.

Also, when landlords are benefiting from huge capital gains, all tax free, do they offer their tenants lower tents? I’m guessing Bob doesn’t think that’s fair to ask, because landlords should have all the upside, and tenants can have all the downside.

I’m a commercial landlord too, but think landlords just need to be honest about how fortunate they are (often mostly by luck) , and not forget what it’s like for the other people who are helping make you wealthy.

    Agreed. Don’t think any tenant in their right mind is going to ask for a rent rise. Also not sure if Wellington Cbd retail property is that insulated from this once in lifetime economic crisis. Will be interesting to see how this plays out in the Wellington commercial property scene.

Hello Bob…
I am a tenant and a landlord… I truly are on both sides or this equation
I believe that the commercial tenant/landlord relationship is reciprocal…if its good for both to have occupied premises and VIABLE tenancies.
As a tenant, over the last 6 years having been the subject to 2 yearly reviews of 15%, 9% and the last asking percentage review of 15% these are “market” based.
So my rent has increased circa 37% over 6 years with inflation at 1-2%. pa.
A good deal of my profit from my business has been transferred to the landlord.
At the rate of several 10,000$

Currently enforced closure and such doom, gloom pending.
Bless Cindy crazy over reaction
The notion to partner with my landlord has been meet with silence.
I guess market forces will prevail…. a vacancy is likely.
And this is not through business mismanagement.
What all of this has done is sharpened my Landlord efforts up …. however rather than follow example, I speak and reason with my commercial and residential tenants… at my cost….. compromise has occurred ….. I like to sleep well (in a modest adobe).

As a aside Bloomers is the head of health in this country, 20/1000 hospital beds where required at the height of the “PANDEMIC”…..or 2% of the forecast and provisioning….. this by any measure is gross mis-management…. how is it that there is no accountability …. in any other enterprise the door would be opened…… honourably he should do the right thing and resign. Or appropriately he should be fired

Trackbacks and Pingbacks

[…] might well agree with all that – and it would be consistent with an interesting post from Bob Jones a day or two back from his perspective as a large landlord –  but it […]

Leave a Reply

%d bloggers like this: