It is intended to apply to the design of most buildings, including offices, other commercial buildings, apartments and social infrastructure, and has significant implications for both new builds and investors and occupiers across the existing market.
Why the change?
The update to design standards follows the release of an updated National Seismic Hazard Model (NSHM) in October 2022, which confirmed that the impacts of future earthquakes are potentially greater than previously expected.
Assessed hazard more than doubled in some areas and increased on average by 50% from earlier modelling. The increases were significant in key centres – 1 to 3 times in Auckland, 1 to 2+ times in Wellington and 1 to 2.5+ times in Christchurch.
What is the response?
With the updated NSHM confirming a significant increase in understood risk, MBIE convened a specialist technical committee to consider changes to seismic design standards. TS 1170.5 significantly increases seismic design requirements – anecdotally moving standards much closer to those in other areas of high seismicity such as parts of Japan and western United States.
Key changes include increased design seismic loads for many areas, adjustment to the way in which ground conditions are allowed for and specific requirements for considering geotechnical matters in the design of a building.
For now, TS 1170.5 has been a technical specification – a draft standard that closed for consultation on 3 April 2024. From here, it is likely to be published by Standards New Zealand and made available as an Alternative Solution to demonstrate compliance with the Building Code.
After this period of road testing, lasting 3 years, it is likely to become a cited standard in the Building Code with compliance with the new standard or an equivalent level of design essentially becoming mandatory after the existing standard is phased out.
What are the implications?
While TS 1170.5 aims to improve the safety and resilience of Aotearoa’s building stock, it comes with trade-offs. Cost implications will vary across different areas, but early estimates are that the new standard could increase building costs by 5–7%, further weighing on development viability.
While the standard will apply only to new building design, of key interest will be the market’s response towards existing buildings designed under current or earlier standards. A building’s NBS or earthquake rating relative to current design standards is already a key consideration for most occupiers and owners.
Existing buildings will rate lower if benchmarked against a new, higher standard, and it remains to be seen how significant the ratings change will be for existing buildings if measured against TS 1170.5.
TS 1170.5 is unlikely to have an immediate effect on decisions to occupy most buildings or their value, but effects may be initially felt for assets on the cusp of market-accepted occupancy standards.
Health and safety considerations will also come into sharper focus, and when TS 1170.5 becomes a cited standard, commercial leases will be tested where these allow tenants to exit or require strengthening works as NBS or building standards change.
In the short term, compliance with TS 1170.5 is not required. However, given the likelihood that it will essentially become mandatory, it would be sensible to take TS 1170.5 into account now in the design of new buildings. A failure to do so could well mean a new building that underperforms relative to the design standards in force once it is completed.
In the mid to longer term, higher seismic standards will also mean a continuation of occupier flight to quality and will support existing premiums for assets with higher seismic ratings. The same drivers should also see voluntary building strengthening continue where there is capacity in the asset, supported by returns.
What about earthquake-prone buildings?
It is useful that MBIE has confirmed there are no plans to change the basis for the assessment of earthquake-prone buildings requiring remedial work. This will remain fixed at 33% of the current building design standard.
MBIE has also been clear that it would like to see general seismic assessments of existing buildings remain benchmarked against current design standards.
However, there is no legal requirement for this, and at least some occupiers will want to know how their buildings rate against design standards that reflect the latest and best science.