Higher rents, but better value tipped

Tenants are being told they will benefit from being back in central Christchurch.

Doing business in Christchurch's city centre will cost more than before the earthquakes, but will offer good value for money.

That's the message from real estate firm Colliers in its latest overview report into the city's commercial property market.

While office and retail tenants have been slow to return to the central city, a shift is now well under way. New buildings in Victoria St and west of the Avon River will soon be followed by others - either planned or under way - in the retail, justice and emergency, and innovation precincts.

Colliers researchers estimate the amount of office floorspace leased in the central city since the quakes would fill 11 Forsyth Barr towers. This includes 50,000 square metres fully secured, with another 38,000sqm under conditional agreements from private tenants and government departments.

Colliers office broker Ryan Geddes says 16 of the city's major office tenants are returning. These include the big banks, law, accountancy and engineering firms, and government agencies.

High construction and refurbishment costs inevitably mean they face higher lease costs. Annual rents for newly built top- grade space are now as high as $425 a square metre, while operating costs have also risen.

Despite this, total occupancy costs for businesses will be only 20 to 30 per cent higher than before, Geddes says. This is because tenants are using space much more efficiently, with some taking as little as 10sqm per staffer.

"As people started to understand construction costs and a new way of doing business, with open-plan offices, they came to realise they could afford to pay the [CBD] rents".

Geddes says after the quakes there was genuine uncertainty whether business would return to the central city. Fear of unsafe or tall buildings was a key reason.

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Higher rents, but better value tipped