Ultra-fast service 'crucial’ to commercial landlords

5:00 AM Saturday October 29, 2016 True Commercial

The Government’s $1.35 billion fibre installation project will provide ultra-fast broadband to 75 per cent of Kiwis by 2019.

The Government’s $1.35 billion fibre installation project will provide ultra-fast broadband to 75 per cent of Kiwis by 2019.

Ultra-fast broadband (UFB) is increasingly important for landlords selling and/or leasing commercial buildings, say the principals of property consultancy and agency Wilson Hurst.

Finn Hurst, who heads up the company’s Auckland office, says commercial landlords should be thinking about the future of their investments in terms of telecommunications capability.

“With the UFB network installation well under way, and construction of technology-focused offices hitting all-time highs, we’re advising our clients that ignoring these technological advancements would be at their peril,” Hurst says.

“Connection speeds are of crucial importance for businesses today, which have increasingly data-heavy needs. This means UFB, which will revolutionise New Zealand’s connectivity, is set to have a direct impact on the commercial property market.”

Vaughan Wilson, Wellington-based principal and director of Wilson Hurst, which provides property services to major national telecommunications companies including Chorus, Vodafone and Spark, says that until now New Zealand has been relying on its 100-year-old copper network for most internet connections.

“The copper network has been improved through technological upgrades, but fibre has much, much greater capacity and is not restricted by distance like copper is to the nearest cabinet or exchange. This is essential in today’s world where we demand fast speeds for downloading data-heavy content such as video.”

Copper uses electrons and electrical conductivity, while fibre uses light and consequently works at the speed of light: nearly three million metres per second, Wilson says.

“When you’re viewing a website that is hosted in Los Angeles, the data is travelling from the United States to New Zealand under the ocean inside a fibre cable in a fraction of a second. Light is the fastest thing we know of and that we can harvest, and this is why the government is spending so much money on fibre, to future-proof our communications needs.”

Effect on property values

Prospective house purchasers — with their children’s tech-heavy needs in mind — are already asking real estate agents about the availability of fibre in streets and this may be impacting their purchase decisions, Wilson says.

“Fibre-connected homes are of importance for businesses that allow staff to work from home, as they will want to ensure staff can work efficiently using their home internet connection. Only fibre can provide this exponentially-higher capacity in broadband speed and reliability.”

In the commercial property market, UFB is also becoming highly sought after among tenants, says Hurst.

“The availability of fibre can affect the potential leasability of a property, flowing on to influence values as well. Tenants are very particular about their communication requirements and the availability of fibre can have a major impact on their decision-making when looking for new premises.”

This is partly because of the recent growth of cloud-based IT solutions for businesses. Without large and reliable bandwidth; cloud-based data storage, off-site servers and VOIP (or Voice Over Internet Protocol) would not be viable, he says.

“Cloud-based solutions are becoming favoured among businesses as it means they can dispense with on-site server rooms in their offices, which take up valuable space. However, relying on offsite storage means businesses need to be able to rely on high-capacity broadband in order to access data from the cloud as and when it’s required.”

During the installation process, network operator Chorus (which is rolling out the UFB network in Auckland) first installs the fibre to buildings, and then to individual tenancies. This makes the fibre network available for current and future tenants no matter which service provider they use now or in the future, Wilson says.

Landlords are therefore encouraged to actively work with network operators to facilitate fibre installation in their properties, to streamline the connection process for tenants who wish to make the switch to UFB.

“Without fibre, a commercial property looks a much less attractive option compared with the opposition property that has fibre.

“And let’s face it, when it comes to leasing vacant property, you want all the weapons you can get in order to compete.”