Commercial tenants are keen to return to the Christchurch CBD, and most would like to do so within the next two years, according to a survey of landlords and tenants by Colliers International in Christchurch.
It found that 76% of central city tenants would consider returning to the CBD and they would all like to be back in the central city by 2013 if possible. The overwhelming majority wanted to be located on levels 1-3 of office space.
Safety was paramount among tenants when considering future space options, followed by rental cost and amenities. Car parking and ‘green’ considerations ranked lowest.
Hamish Doig, managing director of Colliers International Agency in Christchurch, said the findings were in line with the anecdotal feedback his brokers had been receiving from tenants and matched the clear sentiment of landlords who wanted to rebuild in the Christchurch central city.
“We wanted to get an accurate picture of what was the real feeling among landlords and tenants – it’s vital that both groups understand each other so that they can work together to help rebuild Christchurch.
Their collaboration is crucial to our future. Doig said that Christchurch was unusual because the majority of its CBD buildings were owned by local landlords rather than institutions.
“This means they have a very hands-on approach to what’s happening. Clearly they have a real interest in seeing the CBD succeed, quite aside from any parochialism.”
The survey found that very few landlords – 3% - planned to sell their sites with the majority committed to regeneration. Most landlords indicated they would rebuild between 1-3 levels, with only 18% considering higher than five stories.
He said the survey highlighted that most tenants see their current suburban locations as a temporary solution. While the majority had found new premises (72%), they did not see this as a permanent solution.
“Tenants have been quite rightly pragmatic in their approach to date – they’ve shifted out of the CBD as necessity dictated but we’re already fielding enquiry from those same people wanting to look at inner city options as and when they become available.”
Doig said he believed the majority of tenants would return to the CBD within three years if there were sufficient options available and would be prepared to forfeit their suburban rental fees.
“Relatively speaking, many of these tenants are paying less than they were in the central city – they are in far smaller premises, their rentals are considerably less. This means that most tenants will find it palatable to assume a new CBD lease when premises become available even if they are tied into their suburban lease.
“It also needs to be remembered that CBD rents haven’t varied hugely in the past 20 years or so, yet most tenant revenues have probably tripled during that period making rent a small part of overall expenditure.”
With the rebuild it is expected rents will rise to a minimum of $400m/2 net due to the extra strengthening required to meet the new code, the shortage of trades people, and the initial scarcity of supply. “
Doig said developers were already actively pursuing opportunities, particularly those who already had clear sites following the September earthquake.
“We’re already well advanced in discussions with landlords and tenants on some key site in the CBD which will herald the start of the Christchurch rebuild.”
For further information:
Hamish Doig, 021 320 149, Hamish.doig@colliers.com
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