Peter Cooney makes A-grade again

Developer Peter Cooney has always had an eye for an opportunity. His latest move in negotiating a deal for a prime piece of downtown Tauranga land in the middle of the recession had its share of risk, but it has paid off.
Mr Cooney's commercial building company, CBC Construction, has started the first big office building project in the city for nearly 20 years on the corner of Cameron Rd and Elizabeth St. The landmark development will be completed by September 2012.
Already the four-storey, 8500sqm business centre - at present called 247 Cameron - is almost fully tenanted with leading professional services companies Cooney Lees Morgan, KPMG, Staples Rodway and Bayleys Real Estate taking up whole floors and paying $285 a square metre.
The leasing rate is the key. "I knew there were tenants out there looking for A-grade office accommodation but we had to get under the barrier of $300 a square metre," Mr Cooney said.
"By the time you buy in the central business district and you go down into the ground [for basement carparking] you are over the $300 a square metre. Tauranga is not prepared to go to that rate."
Cooney and fellow shareholders made the $30 million project work by paying nearly half price for the $10 million site.
They started with a basic two-storey building and as the blue-chip tenants came on board they improved the design and reached four storeys on the northern side facing Elizabeth St and three storeys behind.
"The standard and maturity of the tenants raised the bar and the design," said architect David Wingate. "We were able to put urban design principles into it, and in a recession we've been able to build a good A-grade building.
"At $285/sq m, it would be hard to make it work in any environment, but we've done the basics well." A building of similar standard in Queen St, Auckland, would attract rental of about $350/sq m.
Mr Cooney said there hadn't been much development in downtown Tauranga because the land is too expensive: "Doesn't that tell you something? Growth will drive the need for more quality buildings - but people are hanging on to older buildings and looking for top dollar. The CBD has become landlocked, and I saw an opportunity because we could get the land cheaper and there was shortage of A-grade accommodation."
Real estate agent Richard Cashmore also saw the opportunity for the high-profile site, formerly home to Bay Nissan and Bay Prestige car dealerships.
Mr Cooney secured the site last July, and Mr Cashmore - managing director of Realty Services - linked with five other investors including three from Auckland and formed Troop Holdings. Troop settled the deal with owner DNZ Property Fund last November.
"During these economic times, the banks aren't as forthcoming and you need more people to invest in a development to meet the banking conditions," said Mr Cooney. "It's taken 10 months to put this project together. It's been very time-consuming but I was always confident."
Realty Services' marketing and administration team, associate Rothbury Financial Services and Bayleys Tauranga will be moving into the ground floor and first level on the northern side, and will have access to the new auction room next to the licensed cafe.
KPMG is taking up 1169sq m on the second level, and above them Cooney Lees Morgan, named the best mid-sized law firm in New Zealand last year, has 1452sq m.
In the southern wing, Staples Rodway - established in Tauranga in 1947 - and two international tenants will be leasing around 920sq m on each floor.
The law firm was started in 1918 by Peter Cooney's grandfather, Hugh Owen Cooney, and carried on by his father Des, who took on partners Lionel Lees and Ed Morgan.
Peter Cooney's brother Owen and cousins Michael and Paul are partners in the firm. Peter never bothered with law; he was too busy following property trends.
He started Classic Builders in 1996 - "I had never swung a hammer in my life" - was soon building smaller $180,000 houses (150sq m-160sq m) for the lower end of the market.
"All the developers/builders were targeting the high end in subdivisions such as Royal Palm Beach and Bethlehem Heights, and it left a gap in the market. We had a field day putting style and quality - fully tiled showers and upmarket kitchens - into the less expensive homes," Mr Cooney said.
Each year since 1996 Classic Builders has built a minimum of 120 houses, peaking at 180.
Mr Cooney is now operating in Whangarei, Auckland, Bay of Plenty, Hamilton, Christchurch and Queenstown, and Classic Builders has become the fifth-largest residential builder in New Zealand.
Mr Cooney said the past year had been tough but he still predicted the firm would reach 120 new homes for the present financial year ending March.
"We moved to other areas to spread the risk," he said. "Out of all the places Tauranga has been the worst hit. It's all about affordability. Before the market bounces back the development fees need to be reviewed.
"If you are building a $350,000 house in Tauranga, the impact fees make up 10 per cent of the purchase price and it's passed on to the buyer. That's wrong.
"The building permit [of $20,000] can be the single most expensive item in a $200,000 house - roofing is about $11,000 and joinery $9000."
Over the years, Classic Builders has developed 700 sections in the Western Bay including Northridge Estate in Welcome Bay, Sabana in Bethlehem, Veda Glen in Pyes Pa, and 78-unit Harbour Park gated community in Katikati.
Classic Builders moved into the apartment market, with 12 units at the Sea Haven in May St, 15 at Long Beach in Banks Ave and 48 in the $25 million Cayman high-rise - all at Mount Maunganui.
It has built 500 houses and units in Auckland, including 46 for Housing New Zealand at Manukau, and developed the Montgomery Ridge subdivision in Whangarei.
Classic Builders is also involved with retirement villages and rest homes in Warkworth, Cambridge and Taupo, and it is developing 30 Barrosa Villas in Queenstown near the Shotover Jet operation.
Between Classic Builders and CBC Construction, the commercial arm established five years ago, Mr Cooney employs 40 people full-time, excluding contractors but including project managers, draughtsmen, quantity surveyors and administration staff.
CBC built Jesmond House at 405 Cameron Rd and home to Opus International Consultants and New Zealand Transport Agency, the new Melba Foods factory at Tauriko Business Estate, and a coolstore for EastPack at Te Puke.
Mr Cooney is eyeing other projects - when the time is right. He has 4 hectares for a commercial development behind Tauranga Hospital, 1.6ha for an industrial development behind Farmer Auto Village in Hewletts Rd, and 50ha for 600 residential sections at Wigram near Christchurch.
It's quite a line-up of development in 16 years. "I'm motivated and just enjoy it. I've surrounded myself with effective consultants and I understand the commercial realities.
"Every time you can go into a development, you have to have an exit strategy. On my own ventures, I can say all of them has made a dollar."