Quake reverses traditional property rules

Members want the Christchurch rebuild to remain within the four avenues. Photo / Doug Sherring

"Isn't it insane! The premium rent will be for the ground floor and the runt of the litter will be the top floor."

Connal Townsend, Property Council of NZ chief executive, reflects on how standard commercial real estate rules had been reversed by Christchurch's earthquakes.

Penthouse office suites with good views may continue to command premiums in Auckland and Wellington but Townsend said his South Island members were now talking about new low-rise offices being built in Christchurch where people would feel safe and ground areas commanding premiums.

The council represents members with real estate worth $40 billion.

With about 100 members who own or manage Christchurch properties, from malls to high-rise office blocks, strip shops and restaurants, warehouses and factories, Townsend said members were strongly committed to Christchurch's CBD which they want rebuilt within the confines of the city's four avenues, rejecting calls for the heart to be re-established on more stable ground to the southwest.

On Monday, Townsend visits Christchurch to meet the council's South Island executive which includes consultants, landlords and investors keen to have national involvement at their meeting.

Last week, Townsend visited Peter Verwer, Property Council of Australia chief executive, to get information on how that organisation helped members after the disastrous floods.

"The talks were about disaster recovery and councils like this have to be involved in terms of redesign and the rebuilding process," he said.

The council's South Island executive told Townsend of their desire that the CBD does not spread into suburban areas but remains confined.

"The message coming through all of them is nobody is going to go into high-rise in a long time, although many high-rises came through very well.

"These people have a great sense of pride of place, they are very loyal to Christchurch and determined to make a go of it.

"They want the office sector to stay in the CBD, within the four avenues.

"A lot of our members are involved in the recovery efforts - valuers, real estate agents, engineers, architects - working for the Government or the local authority," Townsend said.

Yesterday, the council's market outlook breakfast in Auckland heard from BNZ research head Stephen Toplis and Townsend said one of the main messages of that address was that international investors might perceive that all New Zealand had suffered damage, rather than just Christchurch.

"And I agree with that view. The tendency for everybody is to under-estimate the effects on Christchurch and over-estimate the effects nationally."

Townsend is also picking up on fears from Wellington members about the effects of Government cutbacks, and a longer-term state spending downturn.

That will have an knock-on effect on Wellington office space, he said.

MAINLAND PROPERTY BOSSES

Property Council South Island executives:

Graeme McDonald, Jones Lang LaSalle.
Alan Prescott, Harman.
Anthony Gough, Hereford Holdings.
Brent Bailey, Colliers International.
David MacDonald, MacDonald Consultancy.
David Rowland, Christchurch City Council.
Glenn Taylor, Tailorspace Investments.
Gordon Craig, Ngai Tahu Property.
Layne Harwood, Knight Frank.
Rod Churcher, Beca.
Steven van der Pol, Arrow International.

Source: Property Council of NZ