A view to a thrill
When Peter Burling and his crew raced past Oracle at Great Sound in Bermuda and charged towards the finish line to lift the America's Cup, Kiwis across New Zealand were on their feet and cheering them to victory, despite the fact it was 5.30 in the morning and the middle of winter.
Fast forward to 2021, when Team NZ defend their win in the Waitemata Harbour. Auckland's waterfront will be the place to be, and offices with a view of the race will be in hot demand.
For tenants, an address close to the action of the America’s Cup could burnish their reputation with clients and boost efforts to attract and retain millennial talent. With the look and location of a business’s workspace now as important as the performance of the business itself, the lure of a prestige address such as Auckland’s waterfront should not be underestimated.
Bayleys Director of Commercial, Retail and Operations Lloyd Budd says: “Increasingly, businesses are using their workplaces as selling tools, with creative and vibrant workplaces having a direct impact on clients’ decision-making.
Research shows that millennials seek a strong demonstration of purpose from their organisations. Many workplaces are responding to this by making choice of working styles a selling point, allowing millennials to work however, whenever and wherever they want.
The influence of millennials on workspace decisions can be seen in global corporations’ increasing desire for offices their employees can show off on Instagram or Facebook. Many businesses want high-quality fit-outs that showcase the style trends and amenities typically found in the offices of Silicon Valley technology giants: large open spaces, exposed ceilings and floors made from timber or polished concrete. These have been shown to drive tenant inquiry and transactions.
Many of these design attributes can be seen in the wave of new developments in Auckland’s Waterfront. Demand for space in these premises is already high, and that will only increase as the America’s Cup approaches.”
Auckland Council has approved two location options for hosting the Cup: a cluster of bases on Halsey Wharf, Hobson Wharf and Wynyard Wharf East, which is the council’s preferred option; and a cluster of bases on the western and eastern side of Wynyard Wharf and Site 18.
Auckland Mayor Phil Goff says the Wynyard Basin option “will allow a great village atmosphere, is less intrusive on our harbour, around $40 million cheaper and eight months quicker to construct.”
Wynyard Quarter is already booming from the massive regeneration undertaken by the council in partnership with private developers. The former industrial port is now a vibrant mixed-use area for people to live, work, dine, visit and increasingly, innovate as seen by the ongoing development of the dynamic Innovation Precinct.
Mr Budd says: “Further development will cement Wynyard Quarter’s reputation as a desirable place to live and do business. Additionally, the racing area in the harbour will lift the appeal of premises running east to west along the waterfront CBD, especially Commercial Bay, 139 Quay Street, Princes Wharf, and Customs Street.”
Rejuvenation and benefits
The MBIE outlined the Cup’s expected impact in a recent report, highlighting the need for sizeable investment in facilities, planning, organisations and events to cope with the expected lift in tourism and economic activity.
Team NZ’s victory in the 1995 America’s Cup race led to the rejuvenation of the Viaduct Basin ahead of the 2000 race in Auckland. The subsequent building of space on the former team bases generated a positive real estate ripple. It enabled brownfield development of a substantial area that would, if not developed, have limited Auckland’s growth and seen a massive gap in the presence of space between the core of the CBD and the newly developing Wynyard Quarter precinct.
The area is expected to see further development in the lead-up to the 2021 Cup as teams begin testing their boats and training in race conditions. Retail and hospitality providers will naturally gravitate to the centre of the action, but the office sector should be equally attuned to the opportunities presented by the Cup.
The MBIE report says the race will boost the office-related services sector, with conservative estimates showing the sector accounting for more than 10 percent of the total GDP impact and an expected 12 percent growth in labour demand. This rise in jobs will create more demand for office space.
“Forward-thinking commercial businesses should be seizing the opportunity to relocate to accommodation near the Cup action, such as Viaduct Harbour, Wynyard Quarter and other harbourside areas,” Mr Budd says.
“A buzz was created around the team bases last time, and we expect that will happen again with tenants looking to be as close to the action as possible, if it coincides with their leasing timeframes and requirements.
The FOMO effect (fear of missing out) will undoubtedly have a bearing on the leasing decisions of businesses in established, older-style office buildings.”
Although major development is unlikely in the proposed areas for the team bases, there are opportunities nearby, including the Viaduct Harbour and Wynyard Quarter.
With 78,000m² of space across more than 20 buildings, Viaduct Harbour remains one of Auckland CBD’s most popular office precincts. The latest Bayleys Research report shows its vacancy rate falling to 2.3 percent, far below the overall CBD vacancy rate of 6.25 percent. Mr Budd says: “Viaduct Harbour has become increasingly attractive to commercial and corporate tenants as a result of the CBD’s expansion westward to Victoria Park and Wynyard Quarter – which is home to the new Bayleys headquarters, IBM, Datacom and Fonterra as well as the Auckland Council-driven Innovation Precinct.”
Wynyard Quarter’s urban regeneration is well underway, and is expected to continue for the next 20 years. Currently, around a third of the developments planned for the area are being built or scoped for potential occupation. At this stage, this includes Precinct Properties’ Innovation Precinct, Goodman and GIC’s VXV development, and Mansons TCLM’s former Caltex site at 155-167 Fanshawe Street and other potential developments in the area.
There is also potential for other marine-related office demand in waterfront areas such as Site 18.
Maximise the opportunities
Tenants looking to lease space in Auckland’s waterfront should start planning now, given the likely extra demand for a small amount of supply. Considerations include the length of term, staff numbers, density, and size. Viaduct Harbour office premises include ground rent, so TOC expectations should be considered. Further possibilities are taking a short-term lease, or considering hybrid space that may represent an opportunity to shift company culture and working practices.
Mr Budd says: “Tenants already in the area could take advantage of the potential financial gains offered by sub-leasing. Alternatively, there are multiple promotional opportunities that can leverage the America’s Cup excitement and lift tenants’ profile, such as client functions, international or national visits from other offices, and corporate events. Holding internal team events can also help build company culture.
“Being able to combine the great viewing spectacular of global-standard racing with an office leasing strategy would be a great outcome for commercial tenants. It could be a good time to consider leasing options in Auckland CBD’s north-western precinct to take advantage of the energy and thrills of the next America’s Cup.”
The location and quality of a business’s office accommodation can have a significant influence on its fortunes. An abundance of research demonstrates links between office location, employee well-being and a business's bottom line. Human happiness has been found to have large and positive causal effects on productivity, with positive emotions appearing to motivate.
Businesses increasingly want workplaces that bring out the best in their employees and look for features that support collaboration, wellbeing and flexibility in workstyles. New buildings advertise energy efficiencies and green/eco-intelligence as selling points to attract businesses and in turn like-minded staff.
The way forward
Technology, advertising and media companies have long led the way in the creation of modern, innovative offices, and found ways to use their accommodation to display their brand and values. Their offices are designed to focus on people and results that drive even greater business success.
Office designer Lizzi Whaley, who is Chief Executive Officer of Spaceworks Design Group, says a great-looking space can help attract and retain staff. “Offices are changing for the better, offering greater functionality, efficiency and productivity, which is good for a business’s bottom line. Businesses, big and small, want work-space solutions that enhance productivity and efficiency,” she says.
The CEO of a London advertising agency recently summed up the challenge for international property analysts and Bayleys global affiliate Cushman & Wakefield: “I’m not worried about my employees moving to a competitor. We’re competing against them flying to Thailand and working freelance from the beach. Our office needs to be more appealing than that. It needs to be a place they love. Their home, their community.”
Another London advertising agency told Cushman & Wakefield that it purposely walked prospective clients through its stimulating, buzz-filled, and creative office before pitching to them: “Clients tell us that they’ve made their decision to work with us before even reaching pitch room.”
Mr Budd says: “By considering leasing opportunities now, tenants can take advantage of the high-grade options available across Auckland’s waterfront to capitalise on the America’s Cup buzz and enjoy the business rewards.”
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