Commercial property owners with earthquake-prone buildings should strengthen them well beyond the legal minimum or wait, says a property consultant.
A two-tier property market has developed in Hawke's Bay, with those with buildings rated poorly seeing tenants flee - in one case on the same day a seismic report was received.
Brian Jones, director of the Hampton Jones building consultancy, says building standards and public perceptions of what is acceptable may quickly change and it was best to surpass the current minimum standard if proceeding to strengthen a building.
The Building Act of 2004 requires all buildings to be brought up to 33 per cent of the building code - buildings below that level have 20 or more times the risk of damage from earthquakes.
Councils around the country have been given the job of identifying buildings that do not meet that standard, and telling owners to upgrade them.
Property consultant Brian Jones said New Zealand seismic research is expected to change the face of commercial property.
He said the cost of strengthening a building was not always as significant as some believed, particularly when compared with the loss of income through untenanted space.
"Those landlords undertaking strengthening work in the short term may wish to go beyond meeting current minimum strengthening standards, as I believe the building standards will be increased once the review of current standards has been completed," he said.
The commission of inquiry looking at the Canterbury earthquake is yet to report its findings and he suspects that when it does it could prompt changes to the building code.
Owners who have brought their buildings up to the minimum standard may have to do the work again.
Waiting was the best option, unless an anchor tenant had a lease coming up for review and strengthening work was a condition of it remaining, he said.
Many banks are requiring buildings to be up to 80 per cent of the modern standard if they are to occupy them.
He said owners may find it hard to sell or let buildings perceived to be unsafe.
He says once work is started, strengthening beyond the minimum is not much more expensive.
"If you're upgrading a steel frame or concrete frame, the difference between 40 per cent and 70 per cent is not significant compared to all the other costs."
There had been no shortage of choice for commercial tenants fleeing seismically challenged buildings. Valuer Turley and Co's Hawke's Bay Commercial and Industrial Property Market Report, for the first and second quarter of 2012, cited a "supply bubble" as developers and landlords respond to the seismic status of buildings.
Property analyst Pat Turley estimated the extra supply to be the equivalent of a 24-storey building with 1400sq m per floor.
Last week the Co-operative Bank's chief executive Bruce McLachlan visited Hawke's Bay, looking for a new Napier branch premises.
"We had to move about three weeks ago in Napier because we had an engineering report done on our building and we closed the branch immediately," he said.
The building was only 11 per cent of code.
"We literally closed it the same day. We were not happy to put our customers and staff at risk."