12 September 2025
Hon. Simon Watts
Minister for Local Government
Parliament Buildings
Wellington
Tēnā koe Minister Watts,
Commercial property vacancies impacting business viability
I am writing to you on behalf of the Restaurant Association of New Zealand (the Restaurant Association), the largest representative body for restaurants and cafés in New Zealand. An increasing number of our members have raised concerns about the number of empty shopfronts in their communities, and they are concerned about the impact this is having on commercial rent prices as well as on our once-vibrant communities.
Members have raised with us their experiences of commercial landlords increasing rents to the point where it forces long-standing businesses to vacate premises, only for that shopfront to remain empty. The landlords are then able to avoid maintenance and upkeep costs, paying lower rates on property with a diminished value.
These empty shopfronts also negatively impact the wider community. Our cafés, restaurants, and small retailers aren’t just commercial tenants—they are the heartbeat of our streets. They attract people to interact in the community, keep areas busy, increase foot traffic, and are essential to a thriving local economy.
Adjacent properties also become harder to lease and, in some cases, there is increased criminal activity.
There is currently little that territorial authorities can do to incentivise the letting or maintenance of vacant commercial properties. However, we have heard some suggestions from our members that Councils could be given the powers to set special rates on vacant properties, to incentivise the leasing of shopfronts rather than allowing what is essentially landbanking to continue while also providing additional funding for local services which are already under extreme pressure.
We have since looked into international examples of this being implemented, and found that San Francisco’s Commercial Vacancy Tax, passed in 2020 (and paused during the pandemic, being resumed in 2022), was implemented to encourage landlords to fill commercial spaces and set realistic rent prices for small businesses. Under the state policy, when a commercial property remains vacant for 182 days (or 6 months), landlords are taxed at a rate of 250 USD multiplied by the width of the shopfront in feet. The tax doubles after the second year a property remains vacant, and doubles once again after that.
While there has been some negative commentary about this tax, this is mostly due to other policy settings that should have been taken into account when the law was introduced. Landlords in the city face costly regulatory barriers, and enforcement of the law was inconsistent. There was also an exclusion for the central business district, which undermined the policy’s core intention. Overall, the tax has had positive impacts for neighbourhood commercial districts all over San Francisco, with many halving their vacancy rates. In May this year, the San Francisco Office of the Treasurer & Tax Collector said it had collected 5 million USD from this tax, with this money invested into a small business assistance fund.
I would appreciate a response that sets out your position on this issue. We recognise that there may also be other opportunities to better address long-term commercial property vacancies, and would encourage the Government to explore such solutions. In doing so, the Restaurant Association believes it is time for an approach that recognises the value of a thriving street life and the role that fair leasing practices play in making this possible.
I look forward to hearing from you about how we can support the small businesses that make our
communities worth visiting, because when they disappear, the soul of our cities goes with them. In the
meantime, please do not hesitate to contact me directly if I can be of any assistance.
Ngā mihi nui,
Marisa Bidois
Chief Executive
Restaurant Association of New Zealand
cc Hon Louise Upston, Minister for Tourism and Hospitality
cc Hon Chris Penk, Minister for Small Business and Manufacturing