The clock is ticking for Christchurch businesses that took temporary refuge in the suburbs after the earthquakes.
They have until the middle of this year to find new premises or risk penalties from the Christchurch City Council.
Under the Canterbury Earthquake Order, Council permitted temporary accommodation for displaced people and businesses that would otherwise not comply with the District Plan.
The Order expires on 30 June 2021. Any temporary accommodation established under the legislation can only remain on site until that date unless it complies with the District Plan or has a resource consent.
Brynn Burrows, director of office leasing at Colliers in Christchurch, says that this is particularly affecting smaller clients who fled the CBD and are yet to return.
“With the deadline looming, we’ve certainly been fielding more enquiry from businesses in this position that are now eyeing space in the central city or on the fringe. There are still options available, but the leasing market is getting much tighter with more and more clients rediscovering the value of being located in the CBD. Leasing options are limited in some preferred locations.”
Burrows says an extensive Colliers report on the Christchurch market late last year showed that suburban office vacancies continued to grow.
City office vacancy levels are back to pre-earthquake, and the third lowest since reporting began in 1993. At the time the report was released last October, there was 14.9% vacancy in the CBD, compared with 14.3% in 2010 and 10.6% in 2005. Colliers surveyed 265 properties for the report and found 377,777sq m of total CBD office stock, 84.7% of 2010 levels. Post the earthquakes approximately 1000 temporary accommodation permits were approved.
Tracey Weston, the Council’s Head of Regulatory Compliance, says they are aware of 148 temporary permits under which businesses are either still operating – or that Council has been unable to confirm that the activity has ceased.
“We expect this number to reduce as we are currently working through the list of permit holders who have not responded to letters that we sent out in September/October 2020. If businesses continue to operate after the end of June 2021 then enforcement action may be considered.
“Each situation is assessed on a case by case basis. The penalties associated with non-compliance under the Resource Management Act range from a $300 infringement fine to prosecution, depending on the severity of the breach.”
Weston says there is no ability to provide an “exemption,” however, affected business owners can apply to Council for a resource consent if they cannot comply with District plan rules.
Colliers leasing broker Tom Lax says one of the problems facing businesses in temporary accommodation is that their premises aren’t fit for purpose.
“The functionality of the likes of a house is not suitable for businesses long term. It’s just not the same as a purpose built office where, aside from the mandatory compliance, considerations such as good light and nearby amenity are integral. You spend a lot of time at work so your premises are important. By necessity, employees didn’t have as much say about premises after the earthquakes, but they have a lot more influence now.
Lax says there are also a number of start-ups post-earthquake that were working from home but now want to be in the CBD.
“That shift was hampered by Covid last year but this year we’re dealing with a lot of these types of businesses. For instance, one new business I’ve been working with was thinking about the suburbs but has instead opted for the city fringe because of the surrounding amenity and convenience.”
Burrows and Lax agree that that businesses waiting for the lure of rental incentives may be disappointed.
“We don’t see incentives getting any sharper. Landlords are becoming more bullish and clients are finding it harder to pinpoint the right space because there’s now so little available in the CBD.
“The lead time is considerable for any new builds to accommodate demand and landlords want any new development to be 80 per cent leased before they commit to a project. That used to be 50 per cent but banks are much tougher now,” Burrows says.