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Christchurch

Christchurch city is changing shape

A more spread-out city with a compact CBD


 

 

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​​​Christchurch CBD July 2016 small-min.jpg

As ​​​​Christchurch rebuilds, its central city is becoming quite a different place. It will be a more compact, more densely populated and efficient CBD than it ever was before the quakes, commercial property company JLL says.

There is still a way to go before it is full of new buildings and office workers, but JLL says the Christchurch commercial property market​ is now in a solid phase of spending on commercial and residential builds, particularly from the private sector. This will last through until at least 2019 with further public sector development driving activity past this point.

"The huge boom in infrastructure spending in 2013 and 2014 saw Canterbury's economic activity soar ahead of the New Zealand average," JLL Commercial Broker Nick Cape says. "That time has passed and we're now in a period where we have an oversupply of office space and a vacancy rate of 17 percent in our prime office buildings."

By June 2017, the vacancy rate is likely to exceed 25 percent, as another 105,000sqm of stock becomes available.

The prime rental range for Christchurch office stock is $325-$400, compared to $450-$615 in Auckland and $370-$620 in Wellington (gross).

"Secondary rents are in the $265-$360 range for CBD office space, and we don't expect these to change significantly in the next 24 months," Cape says.

"Suburban rents have started to drop away after peaking at $365 psm. With the majority of corporate and large floorplate tenants having already committed to space, those smaller suburban office tenants who moved out of the CBD after the earthquakes are now pondering whether it's the right time to move back into the CBD."

By June 2017 there will be approximately 11,000 office workers in the core CBD area.

"The arrival of more office workers will hatch the retail egg for Christchurch," JLL Research Analyst Tom Barclay says. "The average office worker spends around $141 per week in the CBD, so once the city starts to fill with people, we'll see a flood of new retail as well."

The rebuild of the core CBD area is happening in three waves, Barclay says.

"Over 2015 and 2016, we've seen the return of accountants, lawyers, financial services and restaurants to the CBD, on the western side of the river," Barclay says. "In the second wave, throughout 2016 and 2017, we'll see government departments, banks, retail and hospitality arrive in the southern core CBD, around Hereford, Lichfield and Tuam Street predominantly focused in the retail and Justice precincts.

"And the third wave will occur in 2018 and beyond, hinging around flow-on effects from the convention centre, which will support hotel development and tourism business. That third wave will also bring an increase in central city dwellers as the east frame is developed."

At the same time, there is growth on Christchurch's periphery too. 

JLL Economist and Research Consultant Angela Webster says Canterbury will see huge population growth over the next 15 to 20 years.

"Between 2018 and 2033, Christchurch City's population is forecast to grow by 10 percent, or 38,400 people. On Christchurch's periphery, the percentage change is even higher. Over the same period the population of the Waimakariri district is forecast to grow by 19 percent, or 11,600 people. The Selwyn district is forecast to grow by 32 percent, or 18,600 people. Ashburton district will also grow by 13 percent, or 4,500 people," Webster says.

Growth around Christchurch's periphery was inevitable, Barclay says, but the earthquakes were a catalyst.

"When you look beyond the CBD, Christchurch is becoming a more spread-out city. That will have some consequences in the future, such as higher demand for inner city and city fringe residential; greater public transport use; and the development of peripheral communities into smaller retail and business centres," he says.


One particularly bright spot on the horizon for Christchurch is tourism.

"The global growth of the middle class and the independent traveller is the pot of gold at the end of the rainbow for New Zealand," Barclay says. "Christchurch is in a prime position to take advantage of that. It will continue to be the industrial and distribution centre of the South and the gateway to the South Island for international travellers. Leveraging that position will be a big part of Christchurch's future success."​