Offices built in last 10 years ‘a disaster’

Press, 7 September 1989, Page 17

Offices built in last 10 years ‘a disaster’

PA Wellington Most offices built over the last 10 years are a disaster because they do not provide what people need, says an AMP Society property manager, Mr Paul Tuck. He told a Wellington seminar on property investment in the 19905, run by' the Institute of Valuers, that the information explosion, and an increasingly specialised workforce, meant that better facilities for the latest technology were needed. “Much of what has been built in New Zealand over the last 10 years is a disaster, as it does not now provide what the market requires,” Mr Tuck said. “Much of the existing stock will have to be either refurbished within the next few years, or bulldozed to be replaced by buildings of higher technological quality,” he said.

The surplus of vacant space in commercial property in big cities would take at least two or three years to clear, he said. Rentals would stagnate and there would be few incentives for developers to provide the technologi-cally-advanced buildings becoming common in cities throughout the world. Rents needed to increase to $6OO to. $7OO a square metre a year, net, - for this to happen, said Mr Tuck.

There were no tenants either capable, or willing, to pay such levels when they could lease new buildings, most with serious deficiences — though some were not readily seen — at rentals of about $3OO to $4OO a square metre.

Demographics were also important to commercial property development and investment business over the next 20 years, Mr Tuck said.

Growth rates in the supply of new office and retail space would have to be watched carefully so as not to create imbalances in supply and demand seen over the past three years. Mr Tuck said the property market was close enough to its bottom for its trend to no longer be of concern to long-term investors.

Property was showing historically high running yields and inflation and interest rates were lower.