16 December 2011 Christchurch office-based businesses just as effective in half the space: research

A number of Christchurch businesses now occupy half the office space they did before the earthquakes but turnover has remained stable and businesses intend to expand, says an in-depth survey of the impact of the earthquakes on office property requirements, ten months on.

The 25-question online survey, which was carried out jointly by CBRE and Lincoln University, was sent on 23rd August 2011 to 275 suburban office occupiers and 368 businesses that were located in CBD office buildings prior to the earthquake.

Participants were asked about their previous and current premises, and their thoughts for the future. With a nearly 22% response rate (139 responses were received), 55% were relocated CBD occupiers and 45% were existing suburban office occupiers.

Feedback shows primarily that:

66% of respondents have reduced their office size since the earthquakes, with 34% of respondents halving their space;

45% of respondents are in poorer quality space than before the earthquakes – and 51% of businesses are paying less rent than before.

More than a quarter of relocated tenants (27%) have signed leases of one year or less, and 27% of businesses are now working out of residential premises.

Business turnover has remained stable post-earthquakes for 50% of respondents, with 14% reporting an increase in turnover and only 5% saying that they are struggling to survive;

55% of businesses are positive about future space expansion, and of the businesses that relocated out of the CBD the biggest group (38%) want to return to the CBD into low-rise buildings of 3 floors or less (80%) that meet EQ codes with good amenities and public transport;

Businesses want developers, owners and tenants to have significant input into what is built, how and where in the new CBD, with Public Private Partnerships and low interest Government loans favoured to aid the re-build. The speed of rebuild is important to respondents.

Zoltan Moricz, CBRE’s Senior Director of Research & Consulting, says: “This in-depth research backs up many sentiments expressed over recent months, providing evidence to help the recovery process.

“Our research shows that future demand for CBD office space will not be an issue for many businesses, if buildings are safe, low-rise and well serviced by amenities. The speed and certainty of the recovery will be a major determinant for the success of the future CBD, as many tenants have signed short term leases. Once they expire, they will need to make decisions about their future.”

Dr , Professor of Property Studies, Lincoln University, says: “The results of the survey are interesting in that they show a leaning towards moving back into the CBD by office-based businesses not just retail – subject to a number of conditions such as building height, public amenities, rental levels, and so on.  Until now we have thought that most businesses would remain in their new locations due to factors like long-term leases and the costs of relocating.  While the indicators may be good news for the future of the CBD, owners of suburban office accommodation may need to consider how best to mitigate the impacts of any downturn in tenant demand.”