In the first of a series on the Perth CBD, Business News investigates how working from home could have a lasting effect on the city’s retail market.
Parker & Co has survived a number of economic cycles during its 125 years of business, but co-owner Victor Tana says the retailer has never experienced conditions like 2020.
The high-end menswear store has operated from Trinity Arcade, on the Hay Street Mall, for the past 93 years.
It’s one of the longest-running retail tenancies in Western Australia, according to Mr Tana, who bought the business in the 1980s and now runs Parker & Co with his son, Christian.
During that time, the Tana family has navigated the vagaries of a retail sector at the mercy of the broader economy, riding the highs of resources booms and the lows of slowdowns.
But not much has affected business like the fallout from the COVID-19 pandemic.
“I think it’s probably worse now than ever before,” Mr Tana told Business News.
“Going back, when the population of WA was about a third of what it is now, there were some quiet times, but even now with a lot more population it’s [foot traffic] a lot less.
“Along the Hay Street Mall we had the Royal Theatre, the Ambassador Theatre, the Mayfair Theatre, the Savoy; on a Saturday night that was the place to go, even a Saturday morning was buzzing.
“Since then they’ve started opening shopping centres … so people only come here [the CBD] to work.”
In more normal times, Mr Tana said, Parker & Co was busiest during the week, with most of his Trinity Arcade customers working in the CBD.
However, the state’s pandemic response precipitously removed a large swath of city workers from their offices, and with it much of that clientele. In spite of the current dynamic, Mr Tana was optimistic of a turnaround, but warned of other challenges to be overcome.
“After a little while, I think people will find it boring working from home; they’ll need to get back into an office environment,” he said.
“But we need to fix the city first.”
Mr Tana said that ‘fixing’ required a reassessment of parking and finding solutions to the growing homelessness problem, which COVID had exacerbated.
“We have a Claremont store … people say, ‘Glad you’re in Claremont, we won’t go to the city – parking’s a hassle’,” he said.
“We need to clean up the city, make it presentable. I’m proud of the city but confronted with this [homelessness], people are scared to come to the city.”
Victor (left) and Christian Tana’s Parker & Co has resided in Trinity Arcade for 93 years. Photo: Attila Csaszar
Just down from Mr Tana’s shop, Fitch’s Pharmacy is another long-term Hay Street Mall resident, having operated since 1935.
Current owner Scott Wakefield, who runs Fitch’s with his sister, started working at the pharmacy when he was still in high school in the 1990s, and bought the business 10 years ago.
Like Mr Tana, Mr Wakefield believes the city has deteriorated in recent years.
“I’ve seen the different changes in the city in terms of the mining boom and how the city has changed,” Mr Wakefield told Business News.
“The city used to be very busy. It was very centralised as well; now it’s a bit more sprawling, there are new train stations.
“People used to have to walk through the arcades and the malls to the business area down on St Georges Terrace, but now they don’t have to.”
Mr Wakefield said panic buying when COVID-19 hit had provided a nice lift in trade, but numbers were yet to return to pre-COVID levels, with a few neighbouring stores closing.
“A lot of the places were running on the edge of the profit margins, which were very small anyway, so I think it just sort of tipped them over the edge,” he said.
“In the city, 50 per cent of our business is usually tourists and the other 50 per cent is business workers.
“We had no tourists and we had only half or maybe a quarter of the business workers.
“So there was a big drop.”
Mr Wakefield said Fitch’s had ramped-up its online delivery service in the meantime.
“We’re hearing a lot of the office workers are still rotational, either two weeks on or two weeks at home, or they’re coming in once a day just for meetings,” he said.
“Speaking to a lot of people, they were expecting this mining boom to happen this year … that’s what we were hoping [to draw people into the CBD].
“But these places are realising … working from home is working, maybe they don’t have to come into the city anymore.”
As Perth’s suburbs have grown, foot traffic in the CBD has been impacted. Photos: Fitchs Pharmacy (above), Gabriel Oliveira (below)
Chamber of Commerce and Industry of WA chief economist Aaron Morey said the CBD had recorded the biggest decline in workplace activity during COVID-19 when compared to town centres such as Joondalup, Armadale and Fremantle.
“Google mobility data shows that around 12 per cent of people are still working from home; at the same time, transit patronage is down about 23 per cent,” Mr Morey told Business News.
“I think it’s recovering, but it’s still got a way to go.
“The key is to try and get more people either living in or visiting the city.”
Mr Morey said the possibility of converting empty office buildings to residential or education accommodation had been raised some time ago.
This would help to boost daily population numbers, he said, and act as a buffer if working-from-home practices continued.
Policy reform was another avenue for change, Mr Morey said, pointing to the Commercial Tenancy (Retail Shops) Agreement Act 1985.
That Act mandates that a landlord must offer a tenant a minimum of five years’ tenure for any term exceeding six months.
While shorter terms can be applied for via the State Administrative Tribunal, this process can be time-consuming.
Non-profit organisation Activate Perth is advocating to change the Act, with chief executive Kylie Taylor saying it had effectively stifled new businesses’ appetite to take commercial risks and enter the CBD market, which had contributed to retail vacancies.
“Leading up to COVID, we were seeing some reasonably strong signs in terms of tenant enquiries and vacancy absorption, and then COVID just freezes everything,” Mr Tsagalis said.
“But for some it has actually helped, because JobKeeper and the proportional rent reduction have actually made them way more viable … or been their saviour.”
He said the nature of supply and demand could yet help reduce retail rents.
Injecting more hospitality was another means to lure people from the suburbs into the CBD malls, he said, pointing to a proposed multi-storey cafe, gelataria, restaurant, and rooftop bar for 655 Hay Street.
“Generally there will be some organisations that think remote working will be absolutely better,” Mr Tsagalis said.
“My own view? Working in our business in a collaborative everyday environment is paramount and I don’t think we could execute that remotely.
“But it’s not as simple as saying some will go to suburban [offices]. I think the CBD will remain the preferred and premier location, and this [COVID] will cause some adjustment in pricing … that dollar will drive people into the city.
“The election for the City of Perth couldn’t have come at a better time: this is a time we need strong leadership on how we’re going to deal with planning and density.
“Whoever becomes the lord mayor, the mandate is to collaborate with state government and really reset the CBD to get things back quickly.”