On Monday we posted on government changes to earthquake strengthening policy, linking to a newsflash on the topic produced by Kensington Swan’s property and construction teams.
We outlined that these proposals have major implications for commercial owners, landlords, and tenants, in that owners in lower risk areas will be able to spread strengthening costs over a longer period. However, our newsflash noted that in major cities minimum effort by landlords may not cut it, as tenant demand is usually for upwards of 70% of the relevant New Building Standard (NBS).
This sentiment is echoed by the latest Tenant Earthquake Risk Assessment survey undertaken by Colliers International.The survey found that few tenants would be happy to rent premises in a building with a seismic rating of less than 33% NBS. 41% of respondents would consider a rating between 33% and 67% acceptable, and 48% say only a rate above 67% would be acceptable.
Colliers national research Manager Chris Dibble has said that even where mandatory timeframes for strengthening buildings in low risk regions (such as Auckland) are extended, landlords will still face pressure from tenants demanding high seismic ratings, and the issue will remain a priority. A failure to undertake works promptly may diminish the pool of potential tenants.
Interestingly, the survey found that nearly 60% of respondents said they would not be prepared to pay more rent to occupy a building with a higher seismic rating.