Demand for 180,000 SQm of Office Space in Chch CBD Rebuild
23 February 2012
Demand for 180,000 SQm of Office Space in Christchurch CBD Rebuild
The latest survey of commercial office owners and occupiers in Christchurch shows that demand for office space could reach around 180,000 sqm in the rebuilt CBD. This is based on 32% of the survey’s respondents indicating that they are planning to relocate to the CBD from current suburban premises.
The 180,000 sqm demand base for the rebuilt CBD compares to the 390,000 sqm of office space that was contained in the CBD prior to the earthquake. Although this is a significant reduction in demand, the likelihood that the new CBD will be much smaller in terms of building size and geographic extent will offset some of this shortfall.
The research, which was carried out jointly by CBRE and Lincoln University in January and follows a similar survey carried out in August, also reveals that the proportion of companies that consider moving back to CBD has declined. Now only 32% (45 of the 140 survey respondents) plan to relocate to the CBD, down from 44%. –This decline occurred for a number of reasons, including frustration with rebuild delays and the possibility that rents will be unaffordable in new buildings. Suburban locations have also become more attractive as changes to businesses/client base mean that a CBD location is of lesser importance.
The survey also indicates that if tenants cannot afford their preferred CBD space, more than 40% of survey respondents would locate outside of the CBD where it is more affordable. However, more than 30% of respondents would occupy lower quality CBD space which is affordable.
Significantly downsizing space requirements and accepting the higher rental was not so popular. Other responses said they would buy their own building.
The Central City Plan has received criticism from numerous quarters – quotes included:
“Very ambitious and uneconomical. The fact that the city is not starting with a “blank canvas” makes it even more unrealistic.”
“Concerns at prescriptive building regulations especially strict and unrealistic parking codes for the CBD compared to the suburbs.”
“May look good on paper but the practicality of the plan, costs of implementation and the cost to businesses to locate within the plan are serious concerns.”
Zoltan Moricz, CBRE’s Senior Director of Research & Consulting, says: “This research indicates that a demand base exists to kick start the Christchurch CBD rebuild but it is not going to be plain sailing ahead for the rebuild. The demand base for the CBD has weakened and it may weaken further over time as initial short term leases expire. Although many businesses have indicated they will keep waiting until the CBD is ready, some will commit to long term leases in the suburbs.
“Although higher quality buildings are nice to have, taking into account cost, occupiers prefer lower quality existing buildings or lower quality new buildings.
Lincoln University and CBRE carried out the survey in January 2012. It was sent to 641 office occupier contacts. Over a period of 10 days, 140 responses were received - which is a response rate of 21.8%.
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBG), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services firm (in terms of 2011 revenue). The Company has approximately 34,000 employees (excluding affiliates), and serves real estate owners, investors and occupiers through more than 300 offices (excluding affiliates) worldwide. CBRE offers strategic advice and execution for property sales and leasing; corporate services; property, facilities and project management; mortgage banking; appraisal and valuation; development services; investment management; and research and consulting. Please visit our Web site at www.cbre.com.
About Lincoln University
Lincoln University is New Zealand’s specialist land-based university. Best known for world-class education and research in the areas of agriculture and agri-business, the University also houses New Zealand’s longest-established school of landscape architecture and has been teaching commerce for over 40 years, as well as other associated areas of study. Staff and students are currently involved, through many of the learning and research streams, in the acquisition and sharing of knowledge around the rebuilding of Christchurch and Canterbury post-earthquakes. A strong emphasis is being put on where the specialists' skills can be acquired to make a positive impact in the region in the immediate and longer-term future.