The seismic strengthening of New Zealand’s commercial buildings will place a heavy financial burden on building owners. In some cases, the high costs may make it unaffordable.
IMPENDING CHANGES to the Building Act 2004 will result in consistent evaluation of the seismic performance of almost 200,000 commercial and multi-storey buildings nationwide, followed by 25 years of upgrade work to those that require strengthening.
This assessment and repair project sits alongside the Christchurch rebuild and Auckland house building as a massive undertaking that will test the building industry’s resources and capability.
Canterbury earthquakes heightened awareness
The Canterbury earthquakes focused attention on the seismic assessment of commercial and public buildings ordered by councils and local authorities. A significant amount of resulting upgrade work has already begun across the country.
Alongside this early work, the Canterbury Earthquakes Royal Commission of Inquiry reviewed the seismic resistance of the city’s buildings.
In response to the findings, the government is taking steps to refine knowledge of the seismic capability of the country’s affected building stock and then create consistent procedures and timeframes for required strengthening work. It is expected that, within a year, the Building Act 2004 will be amended to define and enforce the new requirements.
This nationwide assessment of buildings appears long overdue – when the Royal Commission asked, only 22 of the country’s 66 local authorities were able to say how many earthquake-prone buildings they have.
The proposed changes
The Building Act amendment will require that every local authority follows a defined and consistent approach to enforce assessment and strengthening of non-residential and residential multi-unit and multi-storey buildings.
The current proposals are:
- all buildings must be seismically assessed within 5 years
- owners whose buildings are found to be deficient will have 1 year to produce a strengthening or demolition plan
- building owners will then be required to either strengthen or demolish if necessary within a further 15 years
- Category 1 heritage buildings will have a strengthening timeframe of 25 years
- buildings where the impact of failure is low, such as farm outbuildings and some rural halls and churches, will be exempt.
Of almost 200,000 buildings nationwide that will be subject to assessment, it is expected that 15,000–25,000 will need to be strengthened or demolished within the 15-year timeframe.
Defining a building’s seismic capability
The Building Act’s current definition of earthquake resistance will continue to define whether a building passes strength assessment. The minimum requirement is seismic performance of at least 34% of the requirements of the New Building Standard (NBS). The 34%NBS value is aimed at protecting loss of life in a seismic event.
Some groups believe working only towards a %NBS is shortsighted and does not account for the long-term sustainability and resilience of commercial building stock.
New Zealand Society for Earthquake Engineering (NZSEE) Executive Officer Win Clark is urging building owners to strengthen to double the minimum requirement. ‘A building strengthened to 34%NBS does not mean that it will not be significantly damaged in an earthquake,’ he says. ‘We understand that building owners are concerned about costs, but it is worth the extra effort now to put significantly increased resilience into your building.
‘The greater resistance to earthquakes will improve an owner’s ability to obtain insurance and attract tenants.’
Strengthening costs too high for some
Colliers National Director Research and Consulting Alan McMahon believes that many owners will not be able to afford to save their older buildings.
‘The majority of the owners of buildings built before 1976 are individuals who will not have the half a million to a million dollars needed to fix the buildings – especially if, after you’ve spent it, it is only worth what it was before anyway,’ he says.
Alan says research suggests half of buildings built before 1936 and 20% of those before 1976 will be removed from the commercial market because owners cannot afford to keep them functioning.
Impacts on value and rents
Because there will be greater awareness of a building’s %NBS score and of the work required and the timeframe to make any improvements, there may be a direct effect on the market price of buildings. Buyers are more likely to offer lower prices for buildings that require capital investment for earthquake-strengthening works.
There are suggestions that having a register of all building %NBS scores will create incentives for owners to maintain buildings well above the 34%NBS. This could make better-performing buildings even more valuable but, equally, could devalue buildings that meet Building Act requirements but whose owners cannot afford to do more.
In terms of rents, recent findings by Jones Lang LaSalle highlight the increased perception of risk about seismic safety. It found Wellington office space was valued on average at $300/m2 for 100%NBS, while space assessed at less than 34%NBS was priced at $160/m2. The survey also found 78% of tenants wanted to occupy a building with a rating higher than 67%NBS.
Heritage buildings and the Harcourts Building saga
Owners of Category 1 heritage buildings face an additional challenge, because if their building is found to be deficient, they cannot simply choose to demolish it.
An example is the 85-year-old Harcourts Building on Lambton Quay in Wellington that was deemed by an engineer’s report to be at 17% NBS. It now sits empty after the departure of its tenants following the Canterbury earthquakes and the realisation of what the %NBS score means.
Rather than perform another round of strengthening work to add to $4.5 million spent in 2000, owner Mark Dunajtschik planned to demolish the building and rebuild.
But planning commissioners appointed by Wellington City Council declined his application for a resource consent to demolish, saying they were not convinced the building presented an unacceptable risk to the public and that demolition would result in a significant loss of heritage.
The Environment Court subsequently upheld this ruling, saying that just because the building could not support itself financially or make an acceptable return for its owners did not justify its demolition.
Mark Dunajtschik plans to take his case to the High Court, but in the meantime, the building is sitting empty. He has offered it for $1 to the council, the government and the Historic Places Trust, but all declined the offer.
Bruce Chapman, Chief Executive of the New Zealand Historic Places Trust, says that there are around 200 commercial Category 1 heritage buildings nationwide in private ownership.
He says that there will be cases where the economics of retention do not stack up and the community or government may want to consider assistance that might make strengthening possible for the owner.
Increasing commercial awareness
Around New Zealand, increasing awareness of building seismic performance by owners and tenants is having an impact on repair work, new builds and tenant occupancy.
As the following examples suggest, over the coming years, we can expect to see Building Act amendments resulting in assessment, repair, demolition and rebuilding on a large scale.
Getting on with repairs
Building owner Kiwi Income Property Trust has been proactive in spending $54 million on earthquake strengthening of Wellington’s tallest office tower, the Majestic Centre.
Kiwi Chairman Mark Ford believes increases to safety will position the building as a premium asset that is very desirable to tenants. ‘As a good corporate citizen, we needed to front foot it and address earthquake requirements for occupational safety and health and from a commercial point of view.’
New hospital instead of refurb
The government will spend $60 million on a new hospital in Greymouth to replace the existing Grey Base Hospital, which was deemed to have significant seismic issues. An engineer’s seismic assessment of the existing facilities resulted in three wards, the administration building and the Critical Care Unit being given section 124 notices, which identify them as dangerous buildings and restrict public access to them.
Impact being felt in Napier
In Napier, recent seismic assessments and increased overall awareness of building risks are having a major impact on the economic and social value of the city’s many art deco buildings.
As an example, New Zealand Post is moving from the historic central city Post Office building after 84 years. The 3-storey building opened in 1928 and survived the Hawke’s Bay earthquake of 1931.
The Post Office actually meets minimum %NBS requirements, but New Zealand Post spokesperson John Tulloch says the company has set higher standards for the buildings they occupy.
Articles are correct at the time of publication but may have since become outdated.