Michael McGuire: Small businesses in Adelaide CBD are facing an existential threat – how can we save our city’s heart?

Small businesses across Adelaide’s CBD have been crippled by the pandemic and lockdowns. Michael McGuire wonders how our city will look in another 12 months.

There is an understandable desire in some quarters to talk up the state and nation’s economic resilience in the face of the never-ending coronavirus pandemic. We all need a bit of hope in dark times, especially governments with an eye on the election that is just around the corner.

And some of the numbers that float around appear to back the theory that Australia, at least before the current series of lockdowns and restrictions, had recovered pretty well from last year’s corona-inspired recession.

Economic growth numbers were healthy, the unemployment rate dropped quicker than anyone expected.

Just last, week BankSA released its regular state monitor report which said business confidence had reached its highest-ever level before the most recent lockdown. Given BankSA has been publishing that report for 24 years, it was a significant statement. But Business SA this week released a counter report which recorded a dip in business expectations in the June quarter, a step down from a positive March result.

The Business SA conclusion feels a little closer to reality.

Where are the customers? Adelaide’s CBD almost deserted during lockdown. Picture: Kelly Barnes/Getty Images

Small business in Adelaide’s CBD have taken a caning since the start of Covid-19. A couple of weeks ago I wrote a piece in the Sunday Mail highlighting the plight of some city-based businesses. They were mostly family businesses or sole traders. None appeared rich. All were dedicated to a job that is more a way of life than just a way to make a living.

The message from all of them was similar. People had stopped coming to the city and their businesses were dying. It was a combination of factors. Number one was the phenomenon of office workers working from home. But there is also the absence of international students, the lack of tourists from overseas and interstate.

And this was before the last lockdown. The other constant, they said, that when restrictions or lockdowns are announced, a sharp drop off in business is immediate, but the recovery is slow.

Many small businesses in Adelaide’s CBD say they are struggling to survive, a situation worsened by snap lockdowns. Picture: Tricia Watkinson

Since that story, more small businesses in the CBD have been in touch to share their experiences. I’ll leave their names out of it.

“I have been in my shop for 26 years now and I’ve never come across a time so difficult and challenging. I find that the city is no longer like it used to be before.’’

Another: “The immediate loss from last week’s lockdown (for me) is already in the tens of thousands of dollars. After crunching the numbers on Monday, I can tell you that if my business recovers from this one-week lockdown at the same rate as the last shutdown (March/April last year), it will cost approx. $150,000 in lost trade over the next 12 months.’’

More: “The CBD has been absolutely crippled because of people working from home. The latest setback could spell the end for some of us.’’

And one more: “We don’t know how long will people (come) back in to city. And no one knows, but we still pay for rent and outgoing for empty city.’’

Another common complaint is building owners who won’t share the economic pain. Those feeling it most are those stuck in long-term leases, with annual increases already factored in. Those whose leases are about to expire have been able to secure better deals.

They want landlords to show some sympathy for their plight. A recognition, that as their revenue has fallen, in some cases by 50 per cent, that they are just unable to pay the rent. They understand the owners also have to make a living but believe it’s unfair they have to carry all the weight.

At the height of the pandemic last year, a code of conduct dictated a small business could not be kicked out because of non-payment. Rent reductions were also negotiated but those conditions expired on January 2.

The business owners quoted here are trying to hang on, but many others have already given up. It’s not hard to find empty shops in the CBD.

Which creates a vicious circle. Part of what gives any city its vibrancy is the shopping culture, the cafe and food culture. With fewer people coming to the city, more businesses will no doubt close. With fewer businesses open, choice becomes more limited and customers have less reason to visit the city.