Concerns about vacant shopfronts and commercial premises along major urban corridors have led to one local Sydney mayor proposing landlords be penalised for leaving properties empty.

Reasons landlords leave properties vacant for extended  periods can include a desire to seek higher rent, working through development applications or delaying required maintenance due to the costs involved. However, when multiple premises sit vacant for months or years they come to symbolise urban decay with detrimental effects for their local suburban economies.

As a solution, Inner West mayor Darcy Byrne has suggested the NSW government grant councils an authority to charge higher rates to those landlords who leave commercial premises vacant for extended periods of time. Conversely, lower rates could be charged to those owners who keep their spaces tenanted.

The proposal, initially proposed almost a decade ago, has continued been knocked back by both sides of government. “There’s certainly a need for vacancy in commercial areas to be addressed but the is just no way that Labor is proposing a new tax for NSW,” said NSW deputy opposition leader Prue Car. The NSW government has also rejected the idea.

Showing support

However, some business groups remain supportive of the concept including Business Sydney executive director Paul Nicolaou who told the media that “incentivising landlords with tax breaks would help greatly”.

The ‘vacancy tax’ idea was also floated in Canberra last year by Greens crossbencher Johnathan Davis who voiced his concern about the high number of local shops that had remained empty for months, in some cases for more than a year. Mr Davis said the problem was Canberra-wide and particularly evident in his electorate of Tuggeranong where residents were frustrated at the “zombie” premises lining what could instead become lively shopping strips. In other suburbs, certain commercial premises had been vacant for over 10 years, he said.  

“We know of too many instances throughout our suburb where commercial property has been left vacant,” Mr Davis said. “These vacancies rob communities of their full potential.”

A vacancy tax was raised and supported back in 2019 by State small business commissioners including NSWs, and small business and family enterprise ombudsman Kate Carnell. However the current NSW small business commissioner Chris Lamont has knocked back the idea in favour of backing redevelopment as the best way of rebooting high streets whose fortunes had faded.

Mr Lamont argued council rates were for funding services and not to be used as penalties for leaving commercial spaces untenanted.

Different strategies

Retailer Judith Treanor founded The Pop-Up Collective as a way of helping business owners like herself locate and fill suitable premises. Ms Treanor was behind the move to utilise vacant commercial spaces in the northern Sydney suburb of Manly last April by staging indoor pop-up markets at a site marked for redevelopment. The concept tackled two issues in one, the markets protected from increasingly extreme weather events by being brought indoors while also temporarily activating a space that had been empty for four months.

Other hotspots for long-term commercial vacancies are Norton Street, Leichhardt, in Sydney’s inner west, and parts of Oxford Street which runs from Hyde Park in the CBD through Darlinghurst and into Woollahra. Several of the vacant Norton Street stores have been untenanted for at least two years. 

“When shopfronts are left empty sometimes for years that has a detrimental impact on the whole local economy,” Cr Byrnes said. “What we want to do is increase rates for landlords who are keeping their main street properties untenanted so we can fund a decrease in rates for all of the landlords who are doing the right thing.”

Making the old new again

On the revitalisation front, one of the biggest projects is taking place at the Hyde Park end of Oxford Street. The $300 million Oxford&Foley redevelopment involves the transformation of adjacent long standing buildings across multiple blocks into a collection of large offices with heritage features, plus retail stores and a 75-room boutique hotel.

The TOGA Group redevelopment includes a landscaped rooftop above the 9200 square metres of commercial space. Foley Lane which runs parallel behind the project is slated to become a hub for art fixtures and chic eateries with outdoor dining.