Government denies Wellington dying as construction adds to store woes

The government is denying Wellington is dying as more businesses shut their doors, blaming public sector cuts and the cost of living.

Pandoro, Egmont Street Eatery and Yvette Edwards are the latest business casualties shutting up shop in the Capital.

Adding to the woe, stores around Wakefield Street in the CBD are also contending with the road being closed for major construction work on council buildings.

Retail NZ chief executive Carolyn Young said that had been the "death knell" for the area.

"You've got the challenge of whether customers know that you're open or not because of the fact that the road is closed and just the ability to be able to continue to operate in an environment where there's lots of dust and construction and less enticing environments, it's really hard to do promotions and get people to come into that space," Young said.

In a statement, Wellington City Council said it was regularly meeting face-to-face with businesses to get their feedback and updating them about the construction work.

To help improve the street, it had put lights in trees, increased loading zones and put in place dust mitigation measures across the construction area.

But the whole city was facing a double whammy with the government's public sector cuts and the high cost of living, Young said.

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"It's spread wider into local law firms and accounting firms and a lot of ancillary businesses that feed into the government sector, whether they're cafes and restaurants or cleaners. Anyone that works in that space has been impacted by the cuts in the government sector."

With increasing numbers of 'for lease' signs popping up in empty shop windows, Wellingtonians who RNZ spoke to feared the city was starting to lose its identity.

Abigail Houghton, 23, worked at a consultancy firm and moved to the capital because of its culture but said she was saddened walking to work each morning and seeing more businesses shutting.

"Seeing them close is kind of losing the vibe and what makes Wellington itself," said Houghton.

Caelan Hermans, a student, agreed and said she was not spending as much on coffees any more because of all the hospitality businesses that had closed.

"I think it takes away from the vibrancy of Wellington and I just think it's really sad," said Hermans.

Father of two Blake Dearsley said he was not spending casually any more, but when he did, he chose to support different businesses because he recognised the strains owners were feeling.

He had noticed a massive drop in foot traffic in stores, too, and said every closure had a cumulative affect.

"Every business that closes puts more pressure on people.. it's not a good look for Wellington," Dearsley said.

Re Thompson-Taurima moved back to Wellington after the pandemic but was devastated how a lot had changed.

"Really sad to see how different the businesses are and how many businesses I grew up with had shut down."

Finance Minister Nicola Willis blamed the previous government for high inflation and interest rates, saying the country was now seeing the consequences.

Despite the closures, she was adamant the city was not dying.

"No, it's not. There is so much entrepreneurship and excitement still in Wellington whether it's Sharesies, whether its Yu Mei, whether it's the fact that Xero still have so many people here, whether it's Wētā workshop. We have vibrant exciting businesses, they are Wellington's future," Willis said.

But Labour leader Chris Hipkins said Wellington was the city being hit the hardest this year because of the government.

"You ... just walk down the street and you can feel that. You see that in the shops closing and restaurants closing, you see that in the downturn in the building and construction sector here in Wellington.

"So it's not just the public sector that is feeling the squeeze as a result of the government's decision-making: the whole of Wellington's economy is," Hipkins said.

There were around 50 empty stores between Lambton Quay and Courtney Place.

Retail NZ remains hopeful that Wellingtonians are resilient and the city would recover.