Tag Archives | Innovation Precinct

Precinct commits to Wynyard stage 2

Precinct Properties NZ Ltd committed yesterday to stage 2 of its Wynyard Quarter project, part of the wider Innovation Precinct on the Auckland waterfront.

Chief executive Scott Pritchard told the company’s annual meeting yesterday Precinct would develop the second stage, 10 Madden St, on an uncommitted basis. It will comprise a single-level basement & 7 upper levels, providing a net lettable area of 8290m², has an expected total project cost of $72 million and is expected to generate a yield on cost in excess of 7% once fully leased.

In a release out yesterday, Mr Pritchard said: “Committing to the development of stage 2 reflects an important step forward in the development of the wider Innovation Precinct and the creation of a thriving creative hub. We began construction of stage 1 in 2015 and we are excited to proceed with the next stage of the project’s evolution.

10 Madden St’s N Cole Plaza.

“Having developed the Mason Bros building during stage 1 on an uncommitted basis, we have confidence that the quality & location of this development will attract occupiers, with the majority of tenancies expected to be committed prior to completion. We are already seeing good levels of enquiry from businesses wanting to be located in the Innovation Precinct.

“Following stage 2, there are a further 2 sites which offer another 22,000m² of office space, which we expect to develop over the next 5-6 years.”

Sustainability is a leading principle of the Innovation Quarter’s design, and for stage 2 Precinct will be targeting a 5 star green design (office) & as-built star accreditation, and a 4.5 star NabersNZ whole building rating. The building will include end-of-trip facilities, with 12 electric vehicle charging units, and incorporate daylight-harvesting energy-efficient LED lighting. The rear side of the building will also feature a vertically planted green screen which will cover the open egress stairs.

Precinct will undertake the development in partnership with Auckland Council property arm Panuku Development Auckland. Hawkins Construction Ltd will be the main contractor under a fixed-price construction contract. Construction is expected to begin this month, and practical completion is programmed for the end of 2020.

Attribution: Company release, annual meeting.

Continue Reading

Blessing gets $1 billion of the new Wynyard under way

Blessings of construction sites run counter to the dominant forces in a secular society, and the blessing of reclaimed land even more so, you might think.

But in Maoridom the connections with the past, and with place, are important. And so, at dawn this morning, Ngati Whatua o Orakei cultural leaders performed a task which, for modern Auckland, may have more significance than most would suppose.

There were no earthworks on the Wynyard Central site this morning, but there was that connection to the past & the place. Taiaha Hawke, cultural advisor to the Ngati Whatua Orakei Trust, told the small gathering of project executives & council people: “Though it’s reclaimed, we still need to acknowledge the spirits from before you came here.

“Part of your role this morning is to keep us grounded, if you like. It’s also about your aspirations for the site. We know it’s not all about money. You have a greater purpose than making money – growing of the city, leaving your mark on the city after we’re all gone.”

Willis Bond & Co Ltd will develop part of the land for apartments and some retail & hospitality outlets, Precinct Properties NZ Ltd will develop its Innovation Precinct, and Fu Wah International Group will develop a hotel, all with council leasehold factored into long-term pricing.

John Dalzell, interim chief executive of the new council-owned Panuku Development Auckland said Precinct would start work in a fortnight and the transformation would be well under way by Christmas.

He spoke of partnerships with iwi and with development partners: “Partnerships put us in a place we couldn’t have achieved by ourselves.”

Precinct will develop 48,000m² of space in 5 office buildings, which will provide work for over 3000 people, starting with development inside the former Southern Spars mast-stepping warehouse.

Matt Maihi.

Matt Maihi.

Orakei marae manager Matt Maihi was an oil company truck driver then warehouseman in the 1970s and recounted some of the precinct’s history as he experienced it: “In the mid-70s there were rumours the oil tanks were going to go [from what is now the Wynyard Quarter]. We said no, the oil industry will never go away. They drilled a pipeline from Whangarei to Wiri. We said that will never happen. …. Changes were made to break up the unions and now you have contract drivers. We said that will never happen.

“Tomorrow there’s always a change, and from my point of view it’s been for the benefit of many of us.”

On the council-owned Wynyard Quarter sites, that change will amount to about $1 billion of development about to start. The sites spread across a block bordered by Beaumont, Pakenham St West, Halsey & Madden Sts.

Willis Bond has presold over half the first tranche of its apartments and works are expected to start next month on 113 homes on the site bordered by Daldy & Pakenham St West, and in November on 51 apartments at 132 Halsey St.

Deputy mayor Penny Hulse said the day marked the changing waterfront landscape & a strategic use of publicly owned land assets: “It’s important we take the time to mark the passing of the land from its former industrial use to the location for a new residential & working community as it also recognises the significance of the historical links of the waterfront to mana whenua in Tamaki Makaurau.

“Leveraging the use of these important council landholdings is important as it delivers significant financial returns and optimises the use of this prime waterfront land in a way that will offer long-term economic benefits for the city centre & the region.”

Interim Chief Executive of Panuku Development Auckland John Dalzell says after opening up the western edge of Auckland’s waterfront in 2011, with more public spaces, restaurants and bars, the central precinct of Wynyard Quarter will be an important next step.

“What we’re talking about here is setting an exemplar for medium-density development for the region. Building designs will inspire and new behaviours will be encouraged through approaches to recycling, energy & water conservation & generation, walking & cycling amenities, carparking & transport.

“It won’t just be tenants or homeowners who are set to benefit from the development either as – with 11,000 m² of new laneways & open spaces, including nearly 1300m² of retail space – visitors to the Wynyard Quarter will be able to experience a whole new part of the city.”

Image at top: Taiaha Hawke leads this morning’s blessing.

Link: Animation capturing construction stages over the next 5 years

Earlier stories:
9 September 2015: Waterfront Park Hyatt gets consent
18 May 2015: Auckland’s waterfront – aiming to be the international exemplar
6 July 2014: Aiming up while others aim low: McGuinness style will lift Wynyard precinct

Attribution: Blessing, Panuku Development release.

Continue Reading

Revived Lysaght building ready for innovation precinct fitout

$6 million to breathe new life into a 1920s building across the road from the Lighter Basin in the Wynyard Quarter, with fitout still to come?

That’s the price of doing exemplar, 5 green star, seismically upgraded refits, to demonstrate the quality Waterfront Auckland wants to see in the quarter between the Westhaven marina and the downtown waterfront.

Council-controlled Waterfront Auckland and architects Warren & Mahoney celebrated completion last week of the restoration of the unreinforced masonry Lysaght building, on the corner of Pakenham St West & Halsey St, which was built in 1927 and derives its name from the original occupant, the John Lysaght steel company.

The building was last used by a sailmaker, but its future will be as part of the Grid – the innovation precinct the council, waterfront agency, (Ateed) Auckland Tourism Events & Economic Development Ltd and the Ministry of Science & Innovation signed a memorandum of understanding on 4 years ago.

The Lysaght building, on the corner of Halsey St & Pakenham St West in the Wynyard Quarter, down the street from the new ASB building.

The Lysaght building, on the corner of Halsey St & Pakenham St West in the Wynyard Quarter, down the street from the new ASB building.

Waterfront Auckland project director Daniel Khong said the Lysaght building would be the first permanent part of the innovation precinct. Some 1980s buildings alongside it on Halsey St have been adjusted temporarily as part of the precinct.

It has 1800m² of floorspace on 2 levels, has a number of retained features and some which have had to be replaced. Timber pillars around the exterior have been replaced by concrete. Project architect Simon Dodd said some of the timber columns had been sent to iwi carvers to provide artwork for the tenancy fitout.

The window sills were 2.4m above floor level – fine when it was a warehouse, not so for office tenants – and the windows have been lowered by a metre.

On the north side, the building has been opened up above a new lane, which required cutting away of some of the neighbouring building which used to link to the Lysaght building. Occupants will be able to open sliding doors for natural ventilation, but without a deck. They will have a mesh screen for sun protection & safety. The 45m lane will be open at all times and is the start of the laneway network being introduced to break up large blocks through the whole quarter.

The old roof has been turned into a ceiling, and a new roof with insulation will be added on top.

The building was one of 5 deemed to have character value under the Wynyard Quarter provisions of the district plan, and work began early last year on its transformation into an innovation precinct working space. The upgrade has included full compliance with earthquake standards.

Warren & Mahoney’s design for the transformation included the addition of a mezzanine floor, a new moveable façade on the northern face and the liberal use of glass to ensure visibility of the building’s character details.

Project director Daniel Khong said it was great to be involved in breathing new life into the space: “From the rustic masonry to the worn beams in the building’s roof, the Lysaght building has immense charm and it’s great to be able to honour that with this refurbishment. The building is a key part of the fabric of the area with its prominent corner site, and it’s only appropriate it lives on as a thriving workspace for creative & innovative businesses.”

One of the council’s business arms, Ateed, holds the lease and has appointed Bizdojo to manage the premises. The internal fitout is set to begin next month and tenants are expected to move in by September, when the building becomes a cornerstone space for the Grid.

“This project has retained the character of the original industrial building while future-proofing its structure. Lysaght will be an exciting place to work for innovative, startup companies,” said Mr Dodd.

Earlier story:
13 October 2011: Officialdom launches road to a business case for Wynyard innovation precinct

Attribution: Site visit, Waterfront Auckland and Warren & Mahoney releases.

Continue Reading

Shift to waterfront-based cbd supports Precinct’s Wynyard project

Precinct Properties NZ Ltd said on Wednesday it had entered into a development agreement with Waterfront Auckland to develop the commercial office property within the Central precinct of Wynyard Quarter.

The sites will accommodate the Innovation Precinct and have a land area of about 1.1ha, with the potential to develop about 46,000m² of gross floor area.

Precinct chief executive Scott Pritchard said the agreement marked the successful conclusion of the exclusive negotiations announced in February: “We are very pleased to have reached this agreement to work in partnership with Waterfront Auckland. We now have 2 unique & exciting opportunities on Auckland’s cbd waterfront.

“It is widely accepted that there has been a shift in Auckland’s cbd from a historic north-south or Queen St orientation to one that follows the waterfront. We believe this development complements our existing portfolio but, importantly, will support our aspirations for the Downtown Shopping Centre site.”

The current Central design is for 2 sites separated by a 15m-wide public laneway, “the Water Street”. Both sites will have frontage to the Water Street that will run from east to west between them.

It’s envisaged that the 2 sites will be developed in 5 stages. The leasing strategy will build on existing efforts to create a purpose-built information communication technology & digital media hub that brings together innovative entrepreneurs & larger scale companies as part of ATEED’s (Auckland Tourism Events & Economic Development’s) plans for a multi-building innovation precinct in the Wynyard Quarter.

Precinct will undertake the leasing, design & development of the site and, once agreed with Waterfront Auckland, Precinct will acquire a 125-year prepaid ground lease to that stage. Progressing to construction of each stage will require both Waterfront Auckland & Precinct approval.

Mr Pritchard said the consideration for the prepaid ground lease would be determined based on a residual valuation allowing for market-tested assumptions. “The structure provides strong alignment and encourages a partnership approach between Precinct & Waterfront Auckland.”

He said Precinct retained its city centre office sector specialist strategy. “This opportunity caters to corporate occupiers whose operations will benefit from lowrise, larger floorplate accommodation in a city centre location and with a focus on sustainable & innovative design. The Innovation Precinct also widens Precinct’s client base to provide accommodation for high-growth technology businesses that may not otherwise be located in the cbd.”

Mr Pritchard said Precinct was taking advantage of strong investment market conditions and a lack of competing stock to fund this opportunity by recycling capital out of its existing portfolio – selling mature assets.

One on the market at the moment is SAP Tower at 151 Queen St. The sale, by private treaty, closed with Colliers International on 30 April. Mr Pritchard said Precinct had identified additional assets for sale and was repositioning them before taking them to market.

Attribution: Company release.

Continue Reading

Precinct working on Innovation Precinct deal as it plans Downtown project and lifts profit

Precinct Properties NZ Ltd increased net profit after tax by 67% to $39.5 million ($23.6 million) in the December half on net operating income up 22% to $32 million ($26.2 million) – up from 2.63c to 3.1c/share. The company has lifted its first-half dividend by 5.5%, from 2.56c to 2.7c/share.

Precinct also announced yesterday that it’s in exclusive negotiations with Waterfront Auckland to become its development partner for commercial office within the Innovation Precinct at the Wynyard Quarter, on the Auckland waterfront.

A big factor in the profit increase was the $10.6 million fair-value gain in interest rate swaps ($1.7 million a year earlier), which chief executive Scott Pritchard said reflected the increase in market interest rates since 30 June 2013 and the unwinding of interest rate positions.

Rental revenue for the 6 months was up 20% to $82.6 million ($68.9 million), primarily due to new rental income from recent acquisitions. Excluding that, rent was up 3%.

Portfolio occupancy rose from 95% to 97%. The weighted average lease term was unchanged at 5.5 years. Across the portfolio, Precinct completed 30 leasing transactions covering 38,700m².

Mr Pritchard said rental growth in the Auckland office market was strong. The company completed 24 leases & reviews at an average 6% premium to June valuations.

Precinct also entered into negotiations with Auckland Council to co-ordinate the timing of works for the city rail link and the Downtown Shopping Centre development. Mr Pritchard said this project would take advantage of strong growth in demand for city centre office space and would reinvigorate the heart of the city’s main transport hub & waterfront area.

“Planning is progressing well towards a 2016 start for work when current leases in the centre expire. Precinct has appointed a leading international master planner, Woods Bagot, to work closely with local architects, Warren & Mahoney, in planning for this development and the company looks forward to sharing its vision for this new precinct as planning work is completed in the second half of 2014.”

At the Wynyard Quarter, Precinct has agreed non-binding commercial terms with Waterfront Auckland and expected to sign a development agreement within a few months. Final approval remained conditional on Precinct board & Waterfront Auckland approval.

The sites in question have a land area of about 1.1ha and the potential to develop about 46,000m² of gross floor area. “The leasing strategy for the sites will build upon existing efforts to create a purpose-built information communication technology & digital media hub that brings together innovative entrepreneurs & larger-scale companies as part of Auckland Tourism Events & Economic Development’s (ATEED’s) plans for a multi-building innovation precinct.

“Since our inception we have retained a city centre office sector-specialist strategy. This has not changed. This opportunity will complement our existing core cbd offering and allow us to widen our client base to innovative businesses through ATEED’s planned initiatives for high-growth technology businesses. We will also be targeting occupiers whose preference is for lowrise, larger floorplate accommodation, but with all the benefits of a central city location.

“The proposed partnership structure provides for a staged approach, including a prepaid leasehold structure.”

Mr Pritchard said Precinct’s programme of recycling capital out of its existing portfolio would provide funding for this opportunity, taking advantage of strong investment market conditions & a lack of competing stock.

Property expenses were $23.8 million, up 12%, but representing a 3% reduction after adjusting for recent acquisitions.

Following the 2 earthquakes that struck Wellington, the company engaged Holmes Consulting Group to undertake comprehensive inspections of its buildings in the city. These found no material damage to their structural integrity and the non-recoverable cost to repair superficial damage was minor.

Interest expense increased $4.6 million to $16.7 million, reflecting higher debt levels following the purchase of the Downtown Shopping Centre & HSBC House and interest costs associated with the ANZ Centre redevelopment being fully expensed.

Other expenses increased by about 13% as the size of the portfolio grew. Precinct outperformed the benchmark New Zealand-listed property sector return (excluding Precinct) resulting in a performance fee of $1.3 million being payable in the second quarter.

Tax expense of $3.9 million was similar to a year earlier ($3.8 million) despite higher pretax profit. This period’s tax expense relating to the higher profit was offset by an increase in depreciation associated with acquisitions and recognition of a tax deduction relating to the sale of Chews Lane in 2011, which reduced tax expense by about $1.2 million.

Mr Pritchard said an internal review of the 30 June 2013 valuations indicated no material value movement in the period. The 31 December investment property book values were consistent with Precinct’s policy of carrying investment property at fair value.

NTA at balance date increased from 99c to $1/share, mainly reflecting the fair value gain in interest rate swaps and Precinct’s policy of retaining earnings.

Precinct used the proceeds from a $50 million placement and a $12.5 million share purchase plan to repay bank borrowings, reducing them to $556 million ($603 million), and reducing gearing to 34.1% (37.3% at 30 June 2013).

Precinct also reduced its bank debt facilities to $610 million ($660 million at 30 June 2013) as the company carried excess funding capacity following the equity issues. The 2016 tranche was reduced, resulting in a weighted average term to expiry at 31 December of 3.6 years (4 years at 30 June 2013).

67% of Precinct’s drawn bank debt (57% at 30 June 2013) was effectively hedged through the use of interest rate swaps. This hedging resulted in a weighted average interest rate including all fees of 5.8% (5.6% at 30 June 2013) and a weighted average term of 2.4 years (2.2 years at 30 June 2013).

Mr Pritchard said Precinct started the year in Auckland with income-generating occupancy of 97%, significantly higher than at the same time last year. “After allowing for recent acquisitions & the ANZ Centre redevelopment, this improved position led to a 19% increase in Auckland’s net property income.

“The Auckland portfolio is now almost fully occupied, with only 600m² of office space available in the city. HSBC House, which was acquired in May 2013 and had benefited from a 6-month vendor underwrite, is now 100% occupied. 2500m² of space within the building has been secured at a premium to 30 June valuations.”

In Wellington, Mr Pritchard said continued success at State Insurance Tower had led to the portfolio being 96% occupied. “With the strengthening works in the former Central Police Station and reinstatement works almost complete, further leasing progress is anticipated in the next 12 months.”

On the company’s outlook, Mr Pritchard said: “Precinct is well positioned to capture earnings growth in the medium term, with the portfolio no longer over-rented and an expectation in Auckland of sound market rental growth. Earnings growth, however, will lag behind the market due to a lower level of impending expiry and a higher weighting to structured leases.

“In Wellington, market awareness of seismic performance and our commitment to seismic upgrades are contributing to an increase in occupier demand and an improved occupancy outlook. Sustained low prime vacancy rates, and price stability returning to the insurance market, should provide for some modest rental growth in the medium term.”

The company has maintained its guidance for the 2014 financial year of full-year after-tax operating earnings around 6.2c/share (before performance fees) or 6c/share (assuming 50% of the maximum performance fee is payable). Dividend guidance also remains unchanged at 5.4c/share for the full year, consistent with the 90% payout dividend policy.

Attribution: Company release.

Continue Reading