Millions of dollars in value has been shaved off Wellington commercial buildings.
This has been caused by a combination of earthquake strengthening and insurance premiums usually borne by landlords in the capital due to the type of leases prevalent there.
Mark Sherlock of Bayleys says Wellington is seen by the insurance industry as a big risk and premiums are skyrocketing with even bigger rises on the cards.
Before the Canterbury earthquakes Wellington City Council had advised property owners of the requirement for strengthening over the next 10 to 15 years.
Now work has begun in earnest, even for those not considered a risk, because tenants are showing a strong preference for buildings that are rated at more than two-thirds of the new building standard.
Vacancies are likely to be heavily weighted to buildings with seismic ratings of less than 67% and even more heavily weighted against those under 33%.
“It may not be economic for some of those buildings to be strengthened and owners will have little choice but to run the 15-year strengthening period to its bitter end and hope that the economics of strengthening improve or face demolition," Mr Sherlock says.
“Clearly, demolition is not an option for owners of buildings with historic classification.”
Chris Hutching for NBR NZ Property Investor
Thu, 07 Jun 2012
Thu, 07 Jun 2012
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Millions of dollars shaved off Wellington property values
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