The missing link
The City Rail Link’s ability to bring thousands of extra workers into Auckland CBD will transform the office leasing market across the city centre.
Auckland’s City Rail Link (CRL) will strengthen demand in the CBD office market and encourage new leasing activity in areas with high vacancy by creating new vibrant office and retail hubs across the city centre.
Billed as Auckland’s top transport priority, the $3.4 billion CRL will extend the city's passenger rail system past Britomart to connect with the existing regional rail network at Mt Eden.
The project’s ability to bring thousands of workers daily into the CBD should attract the attention of the commercial property sector. Demand for prime office space in Auckland CBD is high, driven by a growing office worker population and high business confidence, and new transport hubs could ease the pressure on availability.
Over the years, the centre of gravity in the CBD has shifted towards the waterfront and west to Wynyard Quarter and Victoria Park, all of which are served by strong transport links. The CRL should make further shifts possible.
Auckland Transport says the project, which is due for completion in 2023, will improve the CBD's connections to city fringe locations and the regions and increase capacity on the entire rail network, by allowing trains to run in both directions through Britomart Station.
Servicing the 3.4km long line will be two new underground stations – one near Aotea Square, the other off Karangahape Road – and upgraded stations at Britomart and Mt Eden.
CRL will, the authority says, double the number of trains on the network, increasing passenger capacity to 30,000-plus an hour, and double the number of people living within 30 minutes travel of the city, giving employers access to a greater pool of talent and delivering travel time benefits of about $1.3 billion to the city’s economy.
The CRL is expected to generate $10 billion worth of development, and has already had a positive influence on others that are well advanced, such as Sky City’s $700 million NZ International Convention Centre and Civic Quarter development near the planned Aotea station.
Much of the demand for prime office space is already focused around the waterfront – home to Britomart rail station, a major bus interchange, the ferry and cruise ship terminals – and nearby Wynyard Quarter.
New developments have brought more than 50,000m² of prime CBD office space on stream in 2017, including three new buildings in Wynyard Quarter.
The game-changer for the area is Commercial Bay, Precinct Properties’ $941 million office and retail development on Quay Street.
Precinct chose the site because of its strong transport links, and worked with Auckland Transport and Auckland council early on to achieve a cohesive and co-ordinated development.
The development is on track to open by mid-2019 and will add 39,000m² of prime office space and 18,000m2 of retail space to the market. Precinct has pre-leased more than 66 per cent of the 39-level, Green Star-rated office tower - attracting major tenants such as PricewaterhouseCoopers, Regus, First Capital New Zealand and law firm Chapman Tripp.
Global law firm DLA Piper recently signed a lease to take 2,700m² across two floors as part of its plans to create a state-of-the-art open-plan workspace.
The mall and dining alleys beneath the office tower - also set to open mid-2019 - will be home to more than 100 new shops, restaurants, cafes and bars. International fashion retailer H&M has already secured space and Precinct has named Zara, Uniqlo and Top Shop as other potential candidates.
Bayleys Director of Commercial, Retail and Operations Lloyd Budd says: “It’s the CRL’s power to deliver workers to often overlooked areas of the CBD that could transform the leasing market. The Aotea Square station, with its entrances at Wellesley and Victoria streets, could shift tenant attention to Midtown and Upper Queen Street, where much of the stock is B and C-grade.
“As more new or upgraded stock come onto the market, landlords will come under pressure to upgrade old space or convert it into new uses. Second tier tenants may not need to spend all that much extra to secure accommodation in a new, Green Star-rated building.
“However, developers with an eye to refurbish tired office space in the area could secure tenants eager to relocate to more affordable parts of the city. An example of this is the upgrade of 54 Cook Street (formerly the Radio Network Building) by Augusta Funds Management, which is set to add 4,000m2 of quality space to the market.”
The area is already well served culturally – it is home to Aotea Centre, Auckland Town Hall, Q Theatre and the Art Gallery – and its hospitality scene, represented by SKYCITY and the top class restaurants and bars on Federal Street in City Works Depot off Nelson Street, will be further boosted by the NZ International Convention Centre and the Civic Quarter Development.
Auckland Council’s plan to transform Victoria Street into a leafy walkway of plazas and green spaces for pedestrians between Victoria Park and Albert Park will increase pedestrian traffic flow.
Providing Upper Queen Street some much-needed energy will be the Civic Quarter development, led by Love & Co.
Love & Co, which specialises in urban regeneration projects, will develop on the 5,300m2 Mixed-Use site - which is bordered by Mayoral Drive, Greys Avenue and Aotea Square - an apartment block, a luxury hotel, a boutique supermarket, A-grade office space and retail outlets.
Love & Co will turn the old Civic Administration Building - New Zealand's first skyscraper - into residential apartments on the upper floors and food and beverage outlets on the two lower floors, with the new development to be known as The CAB.
The buildings will be linked by interconnecting laneways incorporating a mix of bar and restaurant, deli, retail and cultural offerings. Love says discussions are also well advanced with leading artisan food and beverage operators to bring these laneways to life.
At the same time as starting the refurbishment of The CAB, Love & Co will begin work on the three levels of basement car parking that will also form the foundation of several new buildings.
Mr Budd says: "A big attraction for office occupants is the closeness to Aotea Station being developed as part of the City Rail Link.
“The surrounding vibrant laneway environment with also be a drawcard for tenants providing a workplace that is beyond 'just another office block' and would suit companies looking for a location that can provide their employees with a special experience and also enable their business to gain quality brand exposure.”
Good business sense
Developing commercial space around transport hubs makes sense. With city centre space increasingly constrained, infrastructure-led developments have taken on new importance.
Globally, most new large mixed-use schemes are part of existing or new transport hubs. A well-connected and fully integrated transport hub can lead to increased economic activity in the area surrounding it, which in turn helps to attracts new developments, occupiers, businesses and employment initiatives.
The Labour-led Government plans to accelerate the rollout of infrastructure that could lead to the development of new transport nodes. Its $15 billion ten-year programme to build a modern rapid transit network includes light rail to the airport and out to West Auckland.
Good transport links are also vital to Kiwi Property’s plans for its office offering at Sylvia Park. The developer is in the midst of building an $80 million office building at the mall. Insurer IAG has agreed to a 12-year lease of 3,324m² of space at 1 Sylvia Park.
Property Council Head of Advocacy Matt Paterson says: “The reason large commercial developments have such a positive effect on business confidence is that people assume there is a level of economic activity to support them.”
“Large new commercial spaces also attract talent and shoppers to the area. The increased volume of people living, working and visiting has positive economic flow-on effects for all businesses in the surrounding area.”
Mr Paterson says the revival of Auckland’s waterfront and CBD has been years in the making, driven by council and private sector investment. “Commercial Bay provides yet another reason to be in and around the waterfront,” he says.
Mr Paterson believes the CRL will be a catalyst for development around other stations in the loop. “Transport hubs have always been nuclei for business activity because they make it easier for people to get to the area to shop, work of visit. Where there is a good flow of people in an area, businesses tend to do well,” he says.
He adds: “Most of the signs indicate continued economic and population growth in Auckland so we expect ongoing demand for new developments and upgrades.”
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