Plea for quake work in CBD
- Developer warns new earthquake rules could change the face of inner Timaru.
- Alternative is satellite suburban development.
- He urges quake strengthening, but it will come at a cost, both financially and in disruption.
- Landlords should check insurance obligations.
Failing to earthquake-strengthen Timaru's old inner city buildings will encourage satellite suburban development, a property investor is warning.
And tenants of such buildings could well be facing significant rent increases to offset the cost of the work.
Nelson man Keith Whitehead began investing in Timaru property eight years ago - and as he did then - believes the central business district (CBD) buildings must be upgraded to ensure the area is retained.
His comments follow the Ministry of Building, Innovation and Employment releasing draft proposals for a new national earthquake-prone buildings system. It could see all commercial earthquake-prone buildings undergo seismic surveys within five years of a policy change. Owners would have a further 10 years to upgrade or demolish it.
"The work relates to safety, and is unavoidable and major, if Timaru is to keep its healthy commercial centre," Mr Whitehead said, adding building owners had no option but to do the work. Not doing it, would leave them with buildings offering negative returns.
Timaru civil engineer Bob Hall expected a "significant proportion" of CBD buildings would require strengthening work under the proposals.
"Ignoring it will encourage satellite suburban development of new buildings for all manner of uses," Mr Whitehead said.
He purchased his first Timaru property - the former Alpine Energy Building on the corner of Woollcombe and Barnard streets eight years ago, and since then has purchased several properties in the same area. He was part of a syndicate which redeveloped the building used by Smiths City on the corner of Heaton and Stafford streets, as well as the former Timaru Herald building in Bank St.
While any earthquake strengthening work would be the property owner's issue to solve, the subsequent disruption would affect not only the tenants, their clients and customers, but neighbouring businesses and "all manner of people simply going about their business".
"Business disruption to the occupants will be massive," he said, recommending tenants read the "improvements rent" provision of their lease as landlords had extensive "rights" including the right to raise rents.
"Landlords should also check their insurance obligations under the same lease [as] breach of lease terms can be very expensive."
Mr Whitehead said current rent levels would not cover the construction cost of new buildings, adding many buildings will be uneconomic to strengthen or retain and could become uninsurable. He predicted some landlords could demolish buildings, or just not use them.
Recently he was offered three properties close to those he already owns.
The sales did not proceed as they were old buildings and the owners wanted the same price they had always wanted in spite of the strengthening work required. "They haven't come to terms with what it means. The prices were not negotiable."
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