The economy is slowing and house prices are falling, yet billions of dollars’ worth of new property investment is going into Auckland’s CBD - office blocks, hotels, apartments, and shops.
This is a guide to what’s going where.
Auckland CBD building development: What’s going on in the CBD, who’s doing it, why and where?
Culum Manson at Fifty Albert, now under construction. Photo / Dean Purcell
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Consultants and agents JLL compiled the list of projects, showing the development pipeline: Queen Street from Toi o Tāmaki Auckland Art Gallery to Britomart is the focus of local and overseas investors, but Wynyard Quarter is also increasingly busy.
The $4 billion-plus City Rail Link is a catalyst for work. Key projects like Mansons TCLM’s $650 million commercial project Fifty Albert and Shundi Customs’ towering apartment block Seascape at Customs St East are rising near new and existing train stations.
An increasingly mixed-use city centre is being created, JLL found. More apartments and hotels bring more people with the potential to support a more vibrant and diverse economy, helping reposition the centre and support it as a destination for tourists.
Wynyard Quarter has become a key part of the city’s commercial offering, the new commercial business district.
Gavin Read, JLL New Zealand’s research head, said the development plans showed a mix of buildings in different asset classes.
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“As the borders open and international students return, the city centre will become more populated, and we’ll also see some easing on the tight employment market,” Read said.
Cruise ships are back and the Fifa Women’s World Cup is on here this year.
“We’ll likely see wealthy sponsors, tourists and younger visitors that might extend their visit as part of an OE. These events will put further demand on hotel accommodation, which is currently sorely lacking in supply, so it’s encouraging to see more hotel beds,” Read said.
Offices are being retrofitted - a positive move from a sustainability point of view because buildings account for 60 per cent of overall emissions globally and 80 per cent of the building stock that will be standing in 2050 has already been built, he says.
Green retrofitting will be critical to meeting net zero emissions targets, and will become increasingly important to investors avoiding a brown discount on their properties. Precinct Properties’ One Queen Street, now the Deloitte Centre, and the Civic Administration Building, now the CAB apartments, are examples of high-quality retrofits that will benefit the city, Read said.
Jonathan Ogg, JLL New Zealand’s capital markets head, said overseas investors were still drawn to this country for its resilient economy and low unemployment rates.
The agency’s fourth-quarter market snapshot for 2022 referred to tenants wanting better buildings, which will draw the more flexible workforce back into the office.
“The flight to quality we have seen over the past two years is continuing. This is driving further divergence between prime and secondary office space for lease in cost per square metre, as well as uptake of a vacant property. Employers are following their employees, favouring higher-quality workplace environments, and therefore see the investment in prime space as a key strategy in providing fit-for-purpose, flexible offices. The evolving use of the office in this post-pandemic environment requires organisations to reflect on the best use of the workplace to encourage people back to the office and reduce desk vacancy,” Ogg said.
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Vacancies in A-grade office space within Auckland’s CBD is relatively stable at 6.6 per cent. But vacancies in lower-quality, secondary-grade offices is much higher at 16.6 per cent.
And that gap is set to widen.
“As more occupiers move to prime offices in response to the shifting demands of the workforce, this divergence is expected to grow,” JLL said in its report.
Fifty Albert, a block up from Queen St, has been cited as a project of such quality that it will be a strong drawcard to tenants in the changing market.
The Herald has reported Culum Manson as saying that despite predictions of falling demand for new offices, so many tenants had contacted the family business that the 15-level project began without leasing any pre-commitment, due to the firm’s confidence about signing leases well before construction completion.
Mansons bought a new $1m-plus eight-storey Australian crane and erected that at Fifty Albert in 2021 to work on the 28,873sq m office block on what was the Herald site.
It will have quarter-hectare floor plates of 2300sq m catering for around 3000 people to work on 12 office floors.
The building will have 637sq m ground-floor retail, 206 car parks in three basement levels sleeved into the sloping site, a main reception on Albert St, Mills Lane frontage, and 10 1800kg lifts to run at 3.5 metres/second and one goods lift.
It will have 3m internal stud heights and is targeting 6-star world leadership green star rating. The anchor tenant can also get to put their name on the outside of the building, now under construction.
Manson said two years ago: “This new building will be the most sustainably built six-star green-rated building in Auckland’s CBD. We’re taking environmental aspects to a new level, as well as including wellness aspects into its design so people really want to come to work.”
