A Christchurch property developer says rents for commercial tenants are likely to rise in the city centre, though demand for office space in the CBD will decline.
Amherst Properties is the first company to be granted approval to build under the new fast-track system for resource consents developed by the Canterbury Earthquake Recovery Authority and Christchurch City Council.
The development will be a six-level office building - with four levels of office space and two for retail and parking - targetted at the professional customers such as solicitors and accountants.
Amherst Properties owner and managing director, Lindsay O'Donnell, says there is big demand for commercial property, but it's more expensive compared to the prices tenants were paying before the earthquake.
He says the high prices may force some prospective tenants to rent outside the CBD instead.
Mr O'Donnell says the overall office requirement in the CBD will be less than that destroyed by the earthquakes, so it is important not to over-supply the market.
He says construction costs will be higher as there will be pressure on resources and buildings are being designed to different standards.
Hamish Doig, the Christchurch-based managing director of international commercial property consultants Colliers International, says few of its clients will build without having serious pre-leasing commitments.
He's expecting a pick up in construction activity before the year end but thinks there will be less demand for office space.