'No tenants left for the CBD'
A lack of tenants to fill pricey new office buildings is a "total disaster" for the central city, a property developer says.
Property developers warn buildings with "A-grade" rentals in the central business district cannot compete for tenants against cheaper, already-completed developments elsewhere. The warning comes as some developers and investors take their plans and money elsewhere in the face of high construction costs, reluctant tenants and uncertainty over car parking.
Richard Owen, who co-owns the former St Elmo Courts site with his son, Ashton, believed developers had "too many hoops to jump through" and slow progress in the CBD meant suburbs and the city's outskirts had prospered early.
Owen described the central city situation as a "total disaster". He blamed city planners and the Christchurch Central Development Unit's "unrealistic dream" for the CBD.
"It's a nightmare and I wouldn't recommend anyone develop anything in this city," Owen said.
A seven-storey office building is being built on the Hereford-Montreal streets site where St Elmo Courts stood. It is due for completion this year.
"Once it's finished . . . maybe we just sell up and get out and I don't blame all the people who have already done that," he told The Press.
There had been no inquiries from prospective tenants for close to two years, he said.
"All those new buildings have gone down on Papanui Rd, Victoria St, Lincoln Rd, Wrights Rd and Wairakei Rd . . . there's no tenants left for the CBD. Tenants should be clambering at the door but they're not."
Ashton Owen said new inner-city developments were "all hunting for the same tenants".
"We're talking about law firms, accountants . . . people that can afford a new build."
Many businesses were "already settled in the suburbs" and working in the CBD did not offer enough incentives, he said.
Long-time Triangle Centre landlord Michael Ogilvie-Lee recently dropped his concept for a $100 million office and shopping centre between Colombo, High and Cashel streets.
Others to have abandoned major plans include the McFarlane Group, which sold land between Gloucester and Armagh streets; the Goodman Group, which had approval for a $350m precinct at the Bridge of Remembrance, but did not buy the land; and Anthony Leighs, who had plans for five City Mall buildings but instead sold his land to the Government.
Property investor and former director of Harcourts Stephen Collins said the outskirts of the central city, including Lincoln Rd, Moorhouse Ave and Victoria St, had flourished in the "early days of recovery" while the CBD was effectively closed for business.
"People had to make decisions . . . there's only so long businesses will be happy working in adverse conditions before they move on."
Collins said before the earthquakes the CBD used to boast a range of buildings, from A-grade to C-grade office space, but post-quake it was being repopulated with new, expensive buildings that carried high rents.
"Generally speaking, there aren't many older buildings left . . . and with prices rising on an almost monthly basis, fewer people will be able to afford to pay A-grade rents."
Collins is developing a base-isolated six-storey building on the corner of Gloucester St and Cambridge Tce and said he was glad he "got in there early".
"I think it's going to get harder and harder to be honest."
Professional services firm Deloitte would be the building's first tenant next year, but other tenants still needed to be secured.
Canterbury Earthquake Recovery Minister Gerry Brownlee told The Press he had no concerns about the future of the CBD.
"Projects are going ahead and some developers will decide it's perhaps not as easy as they hoped, but that's not unusual."
He said other developers and investors were "going gang busters".
"That's unfortunately how it works."
He said there was still "high levels of confidence among local investors".
"You have to be careful that the experience of one or two people doesn't become the general view of all investors."
- © Fairfax NZ News
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