Quake risks: Tenants get the shakes
Increasing numbers of commercial tenants in Nelson are seeking to quit leases on buildings considered to have high earthquake-prone risks, in favour of more modern or recently upgraded properties.
Nelson commercial property agent Doug McKee is urging commercial building owners to act quickly on commissioning initial engineering reports, or risk being left behind in the backlog.
"There is a dramatic shortage of certified buildings in Nelson," he said.
"A building owner who has completed an engineer's report and who has space to lease has lifted themselves to the top of the pile."
City councillors heard recently that failure to attract a structural engineer needed to carry out secondary assessments of buildings was causing a backlog of work, and threatened to hold up sales and lease transactions on commercial properties.
The council expects to issue notices on hundreds of buildings and structures in Nelson city over the coming years as it works through assessing the strength of commercial and public buildings in the wake of the Christchurch quakes.
The council set aside funding this year to hire a structural engineer, but so far it has not been able to attract anyone due to a major shortage of professionals.
Mr McKee said according to his knowledge few building owners in Nelson had done a prerequisite Initial Evaluation Procedure (IEP), which would then determine if further assessment was needed.
A council-appointed structural engineer reviewed information needed in the event that building strengthening work or demolition was needed, for which building consent would be required.
"Tenants have started asking for IEPs and will only consider buildings that have them. They have started shifting from premises in the city to those that have low to zero levels of risk."
AMI Insurance in Nelson is looking to move its 14 staff from its premises in Halifax St because the office needed strengthening work.
AMI insurance Tasman area manager Graeme Duncan said the company required a building that met the upper end of the earthquake code, which meant it had to be deemed 67 per cent of the new building standard.
"It's prudent for staff and customers to have an environment we are comfortable bringing people into.
"We have an option we are considering in the CBD, but at the moment we're looking at all options.
"One is to remediate our current premises, but if we do find somewhere suitable, a permanent shift would be better than having to do it twice," Mr Duncan said.
He said the earthquake risk was no greater than before the Christchurch quakes, but current thinking had been driven by anxiety around what had happened.
"Once awareness is out there, there's a duty to act," he said.
Mr McKee said owners of buildings identified as needing to be assessed that had not been, or that needed strengthening works, faced not only losing tenants but massive hikes in insurance premiums.
The city council said buildings designed after 1976 were unlikely to be earthquake-prone unless they had a critical structural weakness from a design deficiency or unauthorised alteration.
Mr McKee said few buildings in Nelson city were built after 1976.
Some older buildings, particularly wooden structures, would come through the test reasonably well, but buildings with masonry components presented bigger problems.
"Some property owners are taking the attitude to leave it and wait and see.
"My point is get it done quickly before the pressure really comes on," Mr McKee said.
He said the council had identified the problem and had been proactive in trying to deal with it, but it was going to have to do its job and perhaps employ a company from outside the region, or even a major international firm with capacity to bring people in.
He said there was a nationwide shortage of at least 500 structural engineers. He predicted there would be more buildings demolished in the city because it would not be economic for owners to strengthen them.
"Tenants don't have the ability to pay substantially increased rentals so the cost falls on the landlord," Mr Mckee said.
- © Fairfax NZ News
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