Where pigeons roost
Cathedral Square is still a tough nut to crack, writes Liz McDonald.
Developing property in central Christchurch is no walk in Hagley Park. Especially when you are inexperienced at property development. And especially when your land is in Cathedral Square, a location dogged by inaction and indecision about Christ Church Cathedral, the drawn-out Convention Centre development, and the long wait for the revamp of the square’s public spaces.
There have been no private property developments in the Square in the six years since the earthquakes. Car parks and pigeon roosts are in plentiful supply.
One patient landlord has just had a breakthrough. Nexus Properties, owner of the former BNZ House site, has signed telecommunication company Spark as an anchor tenant for a new four-storey office building after protracted negotiations.
Two doors along, Rev Developments have apartment block plans for the old Heritage tower site, but few sales yet.
Do these developers’ plans, albeit still on paper, make things any easier for the others? Landowners say nothing in Cathedral Square is easy.
With plenty of office space already built in Victoria St, just west of the river and around the retail and innovation precincts, more office development in the square is unlikely.
With hotels still in short supply in the city, hotel development now looks the most likely use of those sites which remain uncommitted.
The ‘‘build it and they will come’’ option is not possible for most of central Christchurch, especially where tenants and buyers are deterred from signing deals by the uncertainty of their surroundings.
Even with insurance payouts to spend, the cost of rebuilding means big borrowing.
Risk-averse banks now demand that commercial property projects have high equity input or sufficient sales or lease deals, or no loan.
An eager and committed buyer or tenant is the only way forward for Cathedral Square landowners.
Disconnected spaces
One long-standing difficulty with the Square is the geography of a place designed in the 19th century to house a church and school.
The shape of the square and its dimensions – it is about the length and width of a city block – makes it hard to bring unity to its private properties. It is a square of four somewhat disconnected corner blocks.
There has been no action at all so far on the square’s south-west. It remains the only corner without development plans. The owners of the former ANZ House site, Central City Estates, are investors rather than developers. Early plans to rebuild with a new building for ASB bank did not get off the ground.
Director John Greenwood described the situation as frustrating. But they were not inclined to sell, he said,
‘‘We don’t have anything going on there at the moment. We are continuing to hold the property for future development.’’
There is no fast action either next door on the historic post office building, which is in need of strengthening and repair if it is to stay.
Owner Gordon Chamberlain remains in a dispute with his insurers, but hopes to eventually develop the site. The cost of repairs could be twice what a new building would cost.
He expects the building will need a new concrete shear wall behind the historic facade, a new light-weight roof to replace the existing asbestos one, steelwork to reinforce the twisted clock tower and major repairs to the cracked and weakened stone and brickwork to bring it up to standard.
‘‘My engineers tell me that we only meet about 30 per cent of the full existing code requirements for strengthening, so a lot of work will be required.’’
Between the old ANZ and post office sites, the city council is demolishing the old public toilets building, and will seal and reopen Strand Lane which connects to Hereford St.
Nearby, the former Regent Theatre site is still owned by the Carter Group, one of the central city’s biggest landowners and a former partner in the Convention Centre project opposite.
Spokesman Andrew Carter said they did not have ‘‘any concrete plans at the moment for the site’’, which is vacant and used for car parking.
He did not want to comment on the prospects for property development in the Square.
Former Press site may change hands again
Immediately behind this site, facing Worcester St, an offshore investor has recently bought the old Holy Grail site from investors Ben Gough, but has not yet announced plans.
The northwest corner of Cathedral Square will be given over almost completely to the Convention Centre, where site preparation is underway and construction is due to start later this year. It is due to be finished in late 2019.
A small site alongside is owned by Emmons Developments, the offshore owners of the old Rydges Hotel building backing onto it. They have not announced plans for their land.
In the north-east corner of the Square is the other big public project – the central Christchurch Library which is under construction and due to be finished in 2018.
Next door development hopes have been raised and fallen on the old Press site. This has now changed hands twice – from Cristo Ltd to Canterbury Property Investments – and office and hotel plans have come and gone.
But it appears this land is in the process of changing hands again. While the buyer’s identity remains under wraps, it is known to be a major offshore hotel chain.
Canterbury Property Investments director Miles Yeoman described the deal as ‘‘good news for Christchurch’’.
He regrets, however, that they could not do their own deal.
‘‘We’ve spent two years number crunching, but we couldn’t make it work,’’ he said. ‘‘We’re not experienced hotel developers on this scale, and these are big numbers.’’
Next door the owner of the former Warners Hotel site, Gordon Chamberlain, has already had hopes of replicating the building dashed. Like other nearby landowners, he says securing tenants has been fraught with problems because of the dilapidated cathedral and delays on promised anchor rebuild projects.
He is still keen to develop the land, which is next to the Novotel hotel land his company also owns.
$5m penthouse apartment planned
In the south-east corner is the only other hotel open in the Square, the Heritage Hotel in the south-east corner which lost its associated tower building in the earthquakes. On the old Heritage tower site at 26 Cathedral Square, Rev Developments are pre-selling their planned Cathedral Towers apartments. Top of the pricelist is the $5.1 million for the penthouse with all the extras.
The development would straddle Westpac Lane and include a cafe and restaurant. To make financing the $60 million project easier, the developers would like to build the two towers separately.
They now have a sales office on the site, but a hoped-for construction date of April or May looks unlikely.
Next door the New Zealand owners of the Distinction Hotel chain are repairing and refurbishing the old 14-storey Millennium Hotel which they bought from the Millennium-Copthorne chain. The new Distinction Christchurch should be open early next year.
Alongside, the drawn-out demolition of the BNZ building is nearing completion. While this site’s proximity to the retail precinct gives it good development potential, former owners Cristo Group were not experienced developers and became frustrated at their lack of progress before selling to Nexus Properties.
Like other owners in postearthquake Cathedral Square, they learned that location is not everything. Owning land in the very centre of Christchurch is the easy part. Putting a new building on it is much harder.