Exodus tipped in CBD
Owners of some of Timaru's older commercial buildings may seek to cut their losses and sell, rather than undertake earthquake-strengthening work.
With local engineers predicting a "significant proportion" of buildings will need work, some owners are thinking twice, and considering selling their buildings, even if they take a loss in doing so, Ray White Real Estate principal Phil Smith says.
It is unknown how many buildings in Timaru's central business district (CBD) are at less than 33 per cent of the present building code, and potentially require upgrading if a proposed new national earthquake-prone buildings system becomes law, but Mr Smith had heard of owners who were considering "cutting and running" rather than upgrading buildings.
At present, only a change of use or significant alteration work triggers the requirement to upgrade.
"There is a certain awareness out there that something is going to have to be done, and let's face it, 90 per cent of Stafford St is in the same boat; unreinforced brick, double-storey, pre-1920.
"The obvious question is if we do bring our building up to requirements, then it is a huge capital investment and are you going to receive that back in terms of rent? There is definitely some feeling out there but I have not seen anyone rushing to the market to quit it."
Nelson's Keith Whitehead, who began investing in Timaru property eight years ago, believes the work must be done if the CBD area is to be retained.
Failing to do so would encourage satellite suburban development, he predicted.
"The work relates to safety, and is unavoidable and major, if Timaru is to keep its healthy commercial centre."
Building owners had no option but to do the work, Mr Whitehead said.
Not doing it would leave them with buildings offering negative returns.
Late last year 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.
- © Fairfax NZ News