Tremors and tenants: The effect of a natural disaster and policy changes on commercial office occupiers in New Zealand

Abstract

Purpose

The purpose of this paper is to explore the changes in commercial office occupiers’ preferences in their building choice as a result of a recent natural disaster which triggered policy changes in building safety.

Design/methodology/approach

This study follows a qualitative research design comprising semi-structured one-on-one interviews with 24 property professionals (commercial leasing agents and property managers) in Auckland, New Zealand. A thematic analysis was employed for identifying, analysing and reporting themes emerged within data.

Findings

Tenants across New Zealand now incorporate earthquake issues in their leasing decisions. Most tenants are familiar with the impending policy changes related to earthquake-prone buildings. The degree to which building standards are incorporated into office occupiers’ choice varies with the size of the organisation and their willingness to invest in their corporate social responsibility. A certain level of overreaction was observed in tenants’ behaviour in the face of risk and uncertainty following the earthquakes. However, risk appears to be subsiding and emphasis is placed on availability of space in desirable locations.

Research limitations/implications

The findings are limited due to a non-random sample selection and a small sample size. Further quantitative research is required to determine if office tenants place a premium on occupying seismically safe buildings since forthcoming regulatory changes have been announced.

Practical/implications

This study provides evidence that imminent building policy changes are efficient in raising public awareness and informing perceptions of potential losses following a recent natural disaster event. Building owners can potentially capitalise on tenants’ desire to occupy high quality space.

Originality/value

This is the first study that develops the knowledge base identifying the perceptions of tenants about seismic safety of buildings since the Canterbury earthquakes. The study also contributes to the literature on the market effect of policy changes triggered by a focusing event.

Citation

Filippova, O. (2016), "Tremors and tenants: The effect of a natural disaster and policy changes on commercial office occupiers in New Zealand", Journal of Property Investment & Finance, Vol. 34 No. 2, pp. 143-155. https://doi.org/10.1108/JPIF-09-2015-0064