Savings spur Auckland Council move to tower

The council hopes to eventually have 2400 of its 6000 staff working in the ASB Bank Tower instead of spread round town. Photo / Janna Dixon

Auckland Council claims it will save $101.8 million in property expenses after 20 years with its $104 million purchase of the ASB Bank Tower on Albert St.

Chief executive Doug McKay cited council executive officer Michael Quinn's report on corporate accommodation to show how the authority would benefit from the deal to buy the block at 135 Albert St with immediate cost savings of $700,000 annually. Over two decades, those savings would become a cumulative $101.8 million, McKay said, making a stronger case for buying than leasing existing properties.

"The money justifies it in itself," McKay said of the purchase "but that makes no financial provision for efficiencies. Council staff can spend up to two hours travelling in and out of the CBD for one meeting."

McKay also expects the value of the tower to increase by around $50 million after the council shifts in, speculating that it could be worth at least $150 million "once the best blue chip tenant in town moves in", compared to its future now after ASB Bank and OnePath staff move out.

The council owns the Civic Building on Aotea Square, Bledisloe Building on Wellesley St, offices in Graham St and at Three Kings but it also leases premises at 360 Queen St, the ex-Telecom Tower on Hereford St and in the ex-Auckland Regional Council headquarters on Pitt St, he said. That made for a scattered, inefficient workplace which was too expensive.

The Civic Building, where 500 staff now work, will either be sold, refurbished or demolished and 2400 people will come from there and elsewhere to Albert St. All up, 6000 council staff work at Takapuna, Henderson, Manukau and elsewhere.

The Civic has asbestos on every floor and although some has been removed, it remains around lift wells and in the corners of all floors, McKay said.

"We want to start populating 135 Albert St by early 2014 and then it will be progressive over a five to 10-year period."

No relocations are planned from offices at Manukau or Henderson but when staff leave Takapuna in 2022 after that lease ends, average annual savings for the council would be closer to $5.1 million, McKay said.

The council, with $3.5 billion borrowed, is funding the tower purchase via debt instruments.

Last week, the council announced the deal to buy the tower from Bookfield Multiplex. Allan Matson of the Auckland Society for Amenity Protection has doubts about the shift.

"I would have thought the civic administration should look over the civic space rather than going into commercial premises."

Property investor Tim Duffett of Newmarket also wondered about the purchase and said it was easier to deal with civil officials in Las Vegas than in Auckland.