Property developers seem to be the most important people in the eyes of the government. The blueprint put them front and centre, limiting land supply to ensure that those within the frame didn’t lose value on their portfolios. The blueprint also strongly favours big developments, which has resulted in big name, big money developers taking on whole city blocks at a time. Some of these developers are relentlessly positive, such as Shaun Stockman:
His advice to people considering living in the central city is simple – “do it”.
“Enjoy the buzz of living centrally. It’s a perfect place to be for people who want an easy care lifestyle and there is something for everyone. The new city is a playground – just get stuck in!”
Something for everyone! The new city is a playground! Just get stuck in! The other developer who can usually be called upon for boosterism has a slightly different message:
High-profile property developer Antony Gough hopes offering pre-earthquake rents will lure tenants to his stalled central Christchurch precinct.
Gough, whose prime hospitality space, The Strip, was demolished after the quakes, said he would charge about $700 a square metre for hospitality space at The Terrace – “a third of what shopping malls are charging”. Hospitality NZ said Gough’s offer was generous but some developers thought it would still be too expensive for tenants.
A “few” tenants had already signed up but he would not say how many.
Demand has clearly not matched the optimistic expectations of those developing in the Cashel Mall area – this isn’t the first time that Gough’s development has stalled. While you have to admire him for pushing on regardless, the underlying economics of the situation should have alarm bells ringing at CERA HQ. As should this story from the Press:
Cristo Ltd has abandoned plans to develop the site of BNZ House in Cathedral Square, which it says is the subject of a dispute with the Canterbury Earthquake Recovery Authority (Cera), and is looking for a buyer.
The building has become an eyesore, sitting half-demolished on the southern edge of the square for more than two years while developers and businesses head west to the banks of the Avon River.
Cristo director Stephen Bell said tenants were not interested in the site, stalling development plans for a multi-storey office building. “The high-end tenants you need to make a building like that, a fairly expensive building, pay, seem to have settled elsewhere and are not really interested in coming right back into the CBD. The possibility of building offices in the centre of the city now seems quite remote.”
Most of the development happening in the CBD is being led by families with a strong connection to Christchurch. The lack of outside investment in the city has always been a problem – but now that these developer families are pulling their money out, where does that leave the wasteland of a CBD? This situation – a CBD rebuild led by a handful of prominent developers – is exactly what the government wanted when they released the blueprint. People have been arguing since 2012 that this is what would happen if they went down this track. They’ve rejected such claims. This is their mess.
Rentals for more than $400s a square metre, which Bell said were needed to make a high-rise development on the BNZ site viable, were unsustainable, [Richard] Peebles said, especially when tenants wanted to be on the west bank of the Avon River and could do so for much less.
Knight Frank director of valuation Will Blake said existing developments had largely catered for office space demand, meaning the old CBD – Cathedral Square and surrounds – “could be in for quite a long period of not much activity”.
“It certainly does look like the central city has shifted to the west and become a bit more elongated rather than just clustered around the square.”
That the city has “shifted to the west” and that people want to be on the west bank of the Avon is telling – this means the developments on Cambridge Terrace and Victoria St. These developments have flourished precisely because they are outside of the area controlled by the blueprint. There is a diminishing business case, to put it in developer-speak, for returning to the CBD. I doubt this is what CERA wanted when they released the blueprint.