Athlete's Foot owner-operator Paul Atherton said a lot of shop spaces in the CBD did not suit the needs of small business owners present day.

"Freijah Menswear, which just closed, is a long, skinny shop. Thinking about what we see in retail spaces, is that still the most appropriate size for a business?," he said.

"If you look at the shape and size of retail spaces in shopping centres, they have broad fronts and don't go that deep, like Cotton On in Horsham. If you look at a lot of those stores the counters are at the back so you don't have that feeling of having to walk past the counter to check out what's in the store.

"It comes back to landlords' willingness to invest and make those spaces appropriate to a particular business. An example I've heard from beyond the region is three businesses are going into an old Masters building, and the landlord has basically come to the party with fit-out costs and reduced rents, so rather than their building being vacant, they are drawing some rental return from that property."

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Mr Atherton, who is also vice-chairman of Business Horsham, said the city's commercial landlords were a mix of local residents and people from out of town, including Melbourne.

He said aside from the cost of rent, people looking to expand or start small businesses had to consider what it would cost them to fit out the space.

"If I was to move to a similar sized retail space to the one I'm in now, as a rough guess, I'd be looking in the order of $60,000 to modify the internals of that space to fit what I do," he said.

"That's an incredible cost on top of everything else.

"Looking at storage for example, buildings with low ceilings don't help, because they restrict the amount of items you can keep. If you walked around a number of the CBD's shops you'd find a number of them have false ceilings, because the buildings are old and have another four or five feet above the ceiling."

Harcourts Horsham principal director Mark Clyne said different landlords had different approaches.

"Some are happy to have people in there paying lower rent than the previous tenant, particularly if they have other income," he said. "Others don't mind if the shop stays vacant and waiting for someone willing to pay a higher price."

Mr Clyne also said he expected landlords to become more realistic with their rents in coming months.

"Five years ago some landlords were making returns of 12 per cent on their Horsham spaces, now it's more like five or seven per cent but some are still trying to maintain 10 per cent in today's market," he said.

Mr Clyne said Harcourt's commercial property arm had received more requests for office space than any other kind of premises in the past 12 months, while retail demand was down.

He also said despite appearances Horsham didn't have fewer businesses, rather more were moving to locations beyond the inner CBD.

"We've seen some businesses leave the main street because rent too high and the buildings too small, and they're going to places like Sloss Street, McPherson Street. We chose to set up on O'Callaghans Parade where tradesmen with trailers could pull up to get keys to do repairs on rentals, a city location doesn't suit our business model today like it did 20 years ago."

While Mr Clyne said he expected retail activity to increase once the Mineral Sands project came to fruition, he also said it was not accurate to use retail as a measuring stick for Horsham's economic performance any more.

"Retail is undergoing fundamental change: There is not the profit in the industry there was 20 years ago even though the cost of labor, insurance and power is much higher now," he said.

"If you want to see how much money is being invested in the town, drive through some of new housing estates."

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