Expectations are looming that commercial building tenants will likely bring pressure to bear on Dunedin landlords to upgrade and earthquake-proof ageing buildings, or face the prospect of buildings emptying.
In the wake of Christchurch's killer earthquake, Colliers International had just completed an inaugural ''tenant earthquake risk assessment'' survey of 500 tenants nationwide, likely the first of its kind in the country, Colliers national director of research and consulting Alan McMahon said.
Centres such as Dunedin, Palmerston North and Napier, with their older building stock, could leave landlords at a greater disadvantage than those in Auckland and Wellington, where there were more newer buildings, he said.
Under the Government's ''new building standard'', a minimum earthquake-proof threshold of 33% must be met, with pre-1976 buildings being targeted for compliance - estimated at up to 25,000 buildings throughout the country.
While 42% of the tenants surveyed said they would be willing to pay more rent to occupy strengthened buildings, only 11% said they would willingly occupy a building rated at less than 33%.
''Tenants are typically of the view that an earthquake-prone building, below the 33% standard, is unacceptable to occupy. The higher the rating the better,'' Mr McMahon said.
The estimated 15,000-25,000 buildings in New Zealand which are below this rating, including some of 3900 in Dunedin, would need to be earthquake-strengthened or demolished, refurbished or changed to a better and higher use, he said.
''Otherwise, they will have a high likelihood of being unleaseable,'' Mr McMahon warned.
While it was good news for landlords that 42% of tenants were willing to pay more rent for strengthened buildings, 58% would not want to pay more rent for increased seismic strength.
He said while prime office buildings would likely already exceed the 33% standard, landlords would be less concerned with the need for more rent to recoup seismic-strengthening work, but the results ''paint a grim picture for the lower end of the secondary sector''.
''This is a sector already facing a low or no growth rental outlook for the next 12 months,'' Mr McMahon said.
The inability to attract or retain tenants, coupled with the inability to pay for seismic strength other than directly by the landlord, or a bank loan, would result in a further widening in the gap between the two sectors, Mr McMahon said.
He said the 11% of tenants saying they would stay in a building rated below 33%, were likely to be sole operators or one-person businesses who would occupy those buildings on short leases.
