Auckland Council Property Ltd will take a proposal to a council committee on Thursday to seek expressions of interest which would decide the fate of the now-empty civic administration building.
The council considered demolition last year because of the high cost of all options, but ran into opponents wanting to save the building.
The council doesn’t need the building for office space after its move to the former ASB Building at 135 Albert St, but the council-controlled Regional Facilities Auckland could use it.
However, Regional Facilities Auckland doesn’t have money to contribute to the building’s upgrade, and the council doesn’t have funds in its 10-year budget either to restore or demolish it.
Auckland Council Property acquisitions & disposals manager Clive Fuhr set out the options, and complications, in a report to this Thursday’s meeting of the council’s Auckland development committee.
He said the building had limited short-term capability for use in its current condition as many of its aging building services would have to be replaced or undergo major repair. The asbestos still in the building would make such work difficult and would require it to be vacated while any significant work was carried out.
Key points in his report:
The recommendation is to seek private sector proposals to refurbish or redevelop the building as part of a co-ordinated project in conjunction with Regional Facilities Auckland’s initiatives to improve & enlarge the Aotea Centre into an Arts Precinct complex.
This approach would enable the council to identify the extent to which the building can have heritage protection addressed through a divestment to the private sector and still retain some public benefit & access.
Regional Facilities Auckland is delaying an urgently required renewal programme for the Aotea Centre to align with civic administration building outcomes. Mr Fuhr said Regional Facilities Auckland was targeting July 2016 for at least a limited or staged physical start.
The old administration building is part of a council landholding bound by Wellesley St, Queen St & Mayoral Drive, with the exceptions of the cinema complex and one building on Queen St.
The council is developing a strategic 20-year vision & plan for the area through the Aotea Quarter framework. It will include a broad strategy covering land use, built form & public realm. The framework, scheduled for completion mid-year, will assist in giving context to any development considerations related to the administration building & Aotea Centre.
The unitary plan hearings panel anticipates pre-hearings on the building’s heritage status in March, mediation in June and hearings in September. Council heritage specialists have said the building could justify a category B heritage status, which wouldn’t necessarily save it from demolition. Critics of demolition as an option say it justifies scheduling as category A.
Auckland Council Property has obtained updated costings which, for major refurbishment options, include cost escalation through a 2-year construction period.
On this basis, the current estimated cost of a full refurbishment as modern office space is $94.6 million, including $10 million to remove asbestos. The scope of this work assumes the existing façade would be replaced with a modern glazing system, existing horizontal & vertical shade fins, screens & balconies would be replaced, internal fittings stripped out, the building would be seismically strengthened and office floors would be rebuilt.
The cost of refurbishment for residential use is estimated at $79 million on the same basis. This assumes 7 apartments/floor, and a lower refurbishment cost as the internal fitout costs & building services requirements would be less extensive.
Mr Fuhr said the cost of converting the building for residential use wasn’t deterring potential private sector developers from expressing interest in it: “The range of likely refurbishment costs is being judged in the context of the increasing sale prices being obtained for good quality residential apartments.”
Mr Fuhr said each council-controlled organisation had largely managed their own accommodation needs. Auckland Transport, ATEED (Auckland Tourism Events & Economic Development) and the Independent Maori Statutory Board commercially leased about 14,000m2 in the cbd at rents that averaged $330/m2.
If the council refurbished the old administration building for offices, debt servicing costs at 5% of the $95 million capital cost would equate to $550/m2/year of net office space. However, Mr Fuhr said the market rent of this space would be about $270-300/m2, based on rents achieved recently in the ex-National Bank Centre at 205 Queen St, which had similar floor sizes and was generally considered a more attractive location for commercial tenants.
The council administration building had 8479m2 of office space over 16 floors of 453m2, plus 2 floors used as a cafeteria & training space.
Mr Fuhr said Regional Facilities Auckland and its partners in the arts community (the Auckland Philharmonia Orchestra, NZ Opera, Royal NZ Ballet, various festivals & others) were exploring basing themselves in one building.
Auckland Council Property has carried out some desktop analysis of the feasibility of residential conversion, assuming it would be possible to provide 7 70m2 apartments on each of the 18 floors. “For cost purposes we assumed a standard similar to SugarTree or 132 Vincent St. With this level of construction costs ($6000/m2), and resultant sale prices in the region of $9000/m2 including gst, “there would still be the likelihood of some financial input by council to make the project viable. However, a financial contribution may be offset by other adjacent land that could be made available to such a developer.”
Mr Fuhr said that if, in the longer term, the council wanted to locate more of its group activities in the Aotea Quarter, it had a large site next to the Bledisloe Building, currently used for parking, which would become available after construction of that section of the city rail link and would be right next to the new rail station.
He said there had been explicit interest from the private sector in converting the civic administration building to residential use, largely encouraged by a number of similar successful projects and the rising value of residential property.
The drift of commercial office space north – towards the harbour – was creating the opportunity for older office buildings to either be redeveloped or converted into residential accommodation. A number of buildings had been converted and several more were under contract to residential developers, particularly south of Mayoral Drive.
Regional Facilities Auckland has a $69 million budget to address extensive renewal requirements for the Aotea Centre, half allocated and half subject to further scoping based on outcomes of the civic administration building and whether Regional Facilities Auckland can make some use of the building or site. It’s allocated a further $30 million of capital funding for growth & new functionality such as rehearsal spaces.
Regional Facilities Auckland corporate & business unit offices occupy parts of the Aotea Centre that can be repurposed for arts & public use if alternative office accommodation is found nearby.
Property consultancy JLL said residential use was seen as the most viable option for the administration building, both in terms of its location and its configuration. There was a consistent view that the residential product needed to be freehold.
The respondents to JLL’s survey saw little demand for office space unless it was from within the council group, considered the building had a suitable configuration for a hotel conversion, but doubted its feasibility.
Overall the demand & supply of commercial office space was increasingly focusing closer to the waterfront, which would be accelerated by the considerable new volumes of office space being developed along Fanshawe St and into the Wynyard Quarter. South of Victoria St, the main office users would be the tertiary sector, the police and the council.
The council’s Auckland design office and plans & places department are co-ordinating the preparation of the Aotea Quarter framework plan. A position paper, including key land-use & built-form findings, is to go to consultation in April and the draft framework is scheduled for completion mid-year.
19 November 2014: Council to consider old HQ’s fate next month
14 April 2014: Council staff want 3 months to prospect for alternative uses of old HQ
Attribution: Council report.