City sea change
In the city’s biggest urban transformation concentrated on lower Queen Street and the waterfront, a 39-storey office tower, shopping centre and luxury hotel, part of the City Rail Link (CRL), bases for the America's Cup and new offices and apartments in the $1 billion regeneration of Wynyard Quarter will be the jewels in the city's crown.
For office tenants there has never been such a concentrated metamorphosis of the downtown and waterfront areas and the chance of moving up to superior premises in a better location is the icing on the cake.
A prestige office close to the America's Cup bases and action could provide reasons to entertain clients without going on the water and ease efforts to attract top staff.
Apart from the benefits the America's Cup will bring to the economy and the private investment being poured into office towers, shopping centres and apartments, Auckland Council is also playing its part in the area's revitalisation.
It plans to spend $313 million on new public spaces along the water's edge between Queens and Princes wharves, increasing the number of ferry wharves from two to six, renewing the sea wall along Quay Street, providing two new bus terminals on lower Albert and Quay streets, pedestrianising the area in front of Britomart and cutting traffic down to two lanes on part of Quay Street.
This is part of the council's City Centre Masterplan and Waterfront Plan, and funding was approved in the 10-year Long Term Plan, with the aim that the entire programme is finished in five years.
Because of the America’s Cup, the work is being done in two phases. Phase one will be complete before 2021. A second phase will begin after the Cup is either won again or goes to another country, and it includes further development of the ferry terminal and ferry berths alongside Queens Wharf.
Councillor Chris Darby, chair of Auckland Council’s planning committee, says when the work is complete it will make the area better for office workers, residents, and visitors alike.
“A variety of distinctive, engaging public spaces that celebrate the confluence of people, land and sea will be created to strengthen the connection between people at the Waitematā Harbour. The new downtown will be a series of destinations.
“There will be a more people-friendly Quay Street, with easier and safer movement between ferries, trains and buses. In just three years, Auckland’s waterfront will look dramatically different and be a more attractive place for office workers.”
Centre of attention
Apple's Steven Jobs understood the benefits of top office locations and thought deeply about office design, saying “there’s a temptation in our networked age to think that ideas can be developed by email and text.
“That’s crazy. Creativity comes from spontaneous meetings, from random discussions. You run into someone, you ask what they’re doing, you say 'wow' and soon you’re cooking up all sorts of ideas.”
The location of a company’s premises can help shape its culture. Culture within companies is something that’s very hard to define, and even harder to voluntarily shape. Environment is second only to employees when it comes to cultivating a strong sense of common identity.
And within that culture, many city office-based tenants tend to use their premises to promote their businesses and enhance their reputation – and, in doing so, they make a 20 percent contribution to Auckland's GDP.
Demand for prime office space in the CBD is high, driven by a growing office worker population and high business confidence.
Precinct Properties’ 39-storey glass tower, now taking shape at Commercial Bay, is in demand with over 78 percent of its 39,000m2 of premium office space already taken, including anchor tenant PwC. Opposite the Ferry Building and sitting above part of the future CRL, the Commercial Bay development will house 10,000 office workers and retail staff when it is finished at the end of next year.
Two floors will be available as small suites, leaving just 6,000m2 to lease across the rest of the building.
In a tight CBD prime office leasing market, most of the space created by Precinct's tenants who are moving out of existing buildings to Commercial Bay has already been taken, though some floors will become available at the ANZ Centre on Albert Street.
Apart from Commercial Bay and Mansons TCLM’s new $250 million, 19,000m2 building now under construction at 155 Fanshawe Street, it is not envisaged there will be many other commercial buildings erected in the short term – largely due to the significant increases in construction and land costs, which make it difficult to stack up a new development.
However, Precinct started work in November on stage two of the Wynyard Innovation Precinct on the waterfront.
The council's development arm, Panuku, has partnered with Precinct to eventually develop 40,000m2 of purpose-built space at GridAKL to connect technologies, designers, digital content makers, product designers and startups.
New development will see a new 8,290m2, seven-storey building go up at 10 Madden Street. It has started without any tenant pre-commitment; Precinct is confident it will be fully leased when finished, as many businesses are keen to be located in the Innovation Precinct.
Worldwide research into urban economies over the past decade shows that whenever the overall number of office workers in an area increases, individual productivity rises. If worker numbers grow by a certain percentage, economic output is boosted by a greater proportion because larger centres enable more specialisation and more interaction between people and firms.
However, Auckland could be constrained in the number of office buildings for lease. Any new buildings projected to get off the drawing board in the next five years are unlikely to satisfy tenant demand as Auckland's prime office vacancy has dropped for the first time in almost three years. Secondary vacancy has increased, but is still well below the long-term average.
The already tough search for superior office space will be compounded in the next few years when 42,000m2 is expected to disappear as buildings are adapted for new uses, including HSBC House at 1 Queen Street, which will be converted to a mixed-use property featuring an InterContinental hotel.
Providing for job growth in Auckland's CBD will be critical to Auckland's economic future. It is predicted 8,000 jobs, many of these office-based, could be created by Team New Zealand's defence of the America's Cup in 2021.
A report by the Ministry of Business, Innovation and Employment says the regatta will boost the office-related services sector, with conservative estimates showing the sector could see a 12 percent lift in demand for workers. This growth in jobs will create more demand for office space.
Offices with a view of America's Cup activity will be in high demand. Many of the businesses in Viaduct Harbour lease the land their buildings are on from Tramco – a property investment company. This area remains one of Auckland CBD's most popular office precincts.
Tramco has 14 hectares of prime freehold land which it leases to building owners on a perpetual basis.
Chief executive Angela Bull says Auckland’s previous America's Cup regattas – in 1995 and 2003 – were the catalyst for the Viaduct Harbour as it is now. “That was really an opportunity to reset the precinct, invest and work with tenants on something special.”
Winning the chance to again host the America’s Cup is a bonus for the Viaduct as it brings “a whole lot more energy and impetus to the place, particularly to tenants in the office buildings but also to bar, cafe and restaurant operators, and could mean more jobs”.
Work on Team New Zealand's base at the Viaduct Events Centre on Halsey Wharf plus bases for several challenger syndicates has already begun.
It is part of the Wynyard Edge Alliance – the Auckland Council and Government – as the owners are represented at governance level by the council, Panuku Development, and MBIE.
The alliance is designing, funding and providing the platform for the challenger bases, cup village, up to 80 superyachts which are expected to be moored at the village, and associated events.
Team New Zealand is converting the Viaduct Events Centre for its base. Hobson Wharf is being extended to accommodate one challenger base, while oil tanks at Wynyard Wharf are being removed for five team bases.
Team New Zealand chief executive Grant Dalton says the planning of the America’s Cup venue and infrastructure has been a detailed but fluid process, and all parties have been highly conscious of infrastructure build costs.
The first bases will be finished next year in time for boat trailing to start at the end of the year.
With thousands of spectators expected to pour into the city every day during the cup races, as well as the regular CBD commuters, city authorities will be working hard to optimise the use of public transport.
The ongoing challenge of getting a growing population of tens of thousands of CBD office workers to their jobs will be made easier once the $3.4 billion, 3.4km CRL is in operation.
Scheduled for completion in early 2024, the CRL is the country's largest transport project and an essential game-changer to accommodate the growth and transformation of the CBD.
The project is essentially turning a one-way cul-de-sac rail system at Britomart into a two-way through system capable of carrying up to 30,000 passengers an hour on trains every 10 minutes in peak hours.
Authorities believe it could lift the value of properties within 500m of the three new stations and create further opportunities for development including offices and retail.
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