Tenants may demand stricter quake codes
Experts weigh in on quake recommendations. Kashka Tunstall reports.
Earthquake strengthening codes might be staying unchanged on paper, but tenants calling for more stringent measures are likely to direct the market's response, Waikato's commercial property experts say.
Last week the Government released recommendations made by the Canterbury Earthquakes Royal Commission on earthquake-prone buildings.
The commission reported that an estimated 15,000 to 25,000 buildings, about 8 to 13 per cent of all non-residential and multi-unit, multi-storeyed residential buildings around the country, may currently be classified as earthquake-prone.
A total of 36 recommendations were made on the management of these buildings, including that buildings identified as earthquake-prone will be required to have seismic assessments carried out within five years to see whether they meet the current threshold of 33 per cent of new building standards.
"We knew that this was going to be a fairly low-level improvement," Holmes Consulting Group engineer Alan Park said. "It isn't a surprise to us.
"I think we're seeing what we thought the Government would do, which is let the market dictate what that level will be, so you'll get some landlords strengthen to a bare minimum, but it's a game of chance really."
"The risk is greater with a lower-strength building than with a higher-strength one."
Colliers Hamilton director Mark Brunton also wasn't surprised that the commission recommended keeping the minimum level at 33 per cent, but thought it would bear little weight in the commercial property sector.
"Leaving it at 33 per cent, I guess the market is steady on that, but I think the market has moved beyond that.
"There's a swag of tenants looking to achieve miles higher than that anyway," Brunton said.
"The market is taking it to a higher level and probably what the report does is reinforce the earlier standards and the bottom end of the market."
NAI Harcourts' Mike Neale said it was a good move to allow standards to be driven by tenant requirements, rather than legislation.
"I think there are possibly some sighs of relief around the country, because the national cost to bring it up to 50 per cent or 67 per cent would have been horrendous," he said.
"[It's] reasonably pragmatic how they're dealing with it and I think the main thing is that it now provides some certainty as to what is going to be required in the future.
"I think people didn't know what to do and they will now probably make decisions on their buildings dependent on who will likely be their tenants in the future."
Owners of buildings have up to 10 years after assessing properties to strengthen to the 33 per cent threshold or demolish their buildings.
"The destructive earthquakes in Canterbury have highlighted the need to review and improve the system dealing with earthquake-prone buildings in New Zealand," Minister of Building and Construction Maurice Williamson said in the report.
"We must ensure the earthquake-prone building system strikes an acceptable balance between protecting people from serious harm and managing the huge economic costs of strengthening or removing the most vulnerable buildings."
Brunton said the report had huge implications financially for the sector.
"We can't really argue against health and safety initiatives, but the cost and implications of the whole thing are just enormous," he said.
The proposed changes will accelerate the strengthening timeline by 13 years and accrue extra strengthening costs of $750 million nationally.
The current strengthening system, which would take 28 years on average under current local authority policies, is estimated to cost $933m. The system the commission is recommending will accelerate strengthening to be completed in the next 15 years and would cost $1.68 billion.
Lodge Real Estate commercial property managing director Nigel Corkill said Hamilton was in a better position than other major New Zealand cities to meet the possible changes.
"Hamilton was one of the earlier, more proactive councils to get people to do earthquake assessments," he said.
"Hamilton is in a good space, having pre-empted this by getting in touch with building owners.
"We haven't heard the final view from the Government.
"There's still debate on whether there are going to be regional differences and, generally, Hamilton and Waikato earthquake probabilities are low," Corkill said.
Territorial authorities could be empowered to adopt an earthquake-prone building policy that is stricter than the national policy. New legislation may also allow building owners to bypass historical covenants in the case of severe danger to human life.
The commission recommends setting out in new legislation that if a building is in a state where demolition is necessary to protect people from injury or death, even if it is protected by a district plan or under the Historic Places Act, no consent for demolition would be required.
The commission has also recommended that the use of the term "new building standard" be replaced with the term "ultimate limit state" to more accurately reflect how buildings will perform in earthquakes.
The Ministry of Business, Innovation and Employment is consulting on the recommendations and has called for public submissions before March 8..