Corporate tenants keen to see better safety ratings
Commercial property tenants are demanding a higher seismic safety benchmark than they did six months ago, according to a new survey by Colliers International.
Results from its second tenant earthquake risk assessment survey show that more respondents now feel the widely accepted "safe" rating should be more than 67 per cent of new building standard, compared with six months ago.
The number who believe the new "safe" rating should be between 33 and 67 per cent has also fallen since the last survey.
The survey measured the market's understanding, concerns and acceptance of seismic strength and insurance issues from an occupier's viewpoint.
Colliers Auckland research manager Chris Dibble said the results show commercial property occupiers had become less complacent.
"There has been a noticeable shift in the last six months, with more corporate tenants now of the opinion that over 67 per cent of new building standard should be the widely accepted new ‘safe' rating.
"While you might expect occupiers to have become more complacent about seismic strength as more time has passed since the Canterbury earthquakes, we believe this year's Cook Strait earthquakes have brought the issue to the fore again."
Wellingtonians are more concerned than their Canterbury and Auckland counterparts when it comes to seismic strength and ratings.
This was underlined this week when BP confirmed it was walking away from its earthquake-damaged headquarters in Customhouse Quay and shifting to Auckland.
"The impacts of seismic strengthening issues are still being felt acutely across the Wellington commercial property market," Dibble said.
"However, these issues are becoming better understood this year and are being worked through."
The survey results follow a recent admission by the Ministry of Business, Innovation and Employment that it had not taken action on quake-prone buildings, leaving bosses to break health and safety laws by allowing staff to work in known earthquake-prone buildings.
"We have been pointing out the risks of businesses continuing to occupy earthquake-prone buildings for some time - from the risk to business continuity right up to the risk of loss of lives.
"With the issue now getting more attention in the public arena, it is in landlords' best interests from a legal point of view to take proactive steps to ensure the safety of their tenants."
The survey also shows insurance costs are still a big issue for occupiers of commercial property, with respondents reporting widespread rises in insurance costs - some by more than 300 per cent.