Brynn Burrows, director of office leasing at Colliers in Christchurch, says 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, the city council permitted temporary accommodation for displaced people and businesses that would otherwise not comply with the District Plan.
The order expires on June 20 - and 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, Burrows said.
Burrows said 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 said 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 per cent vacancy in the CBD, compared with 14.3 per cent in 2010 and 10.6 per cent in 2005, Burrows said.
Colliers surveyed 265 properties for the report and found 377,777sq m of total CBD office stock, 84.7 per cent of 2010 levels. Post the earthquakes about 1000 temporary accommodation permits were approved.
City council head of regulatory compliance Tracey Weston said it is aware of 148 temporary permits under which businesses are either still operating or the council has been unable to confirm 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," Weston said.
"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, she said affected business owners can apply to council for a resource consent if they cannot comply with District Plan rules.
Colliers leasing broker Tom Lax said 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," Lax said.
"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 said there is also a number of post-earthquake start-up businesses 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 agreed businesses waiting for the lure of rental incentives may be disappointed.
"We don’t see incentives getting any sharper," Burrows said.
"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 said.
