International commercial leasing concept for Tauranga

The regeneration of Tauranga's central business district continues to gather momentum - with the new six storey commercial and retail complex, on the corner of Cameron Rd and 3rd Ave now taking shape.

Construction work is up to the top floor.

The new $40 million Cameron Rd and 3rd Ave building will have almost 7,800 net square metres of floor space and retail outlets, with the capacity to house some 600 office workers.

As well as an outdoor space and cafe at ground level, there is an additional 2453 sq m of basement car parking which will accommodate 105 vehicles.

Demolition of the old commercial buildings previously on the site was completed in the middle of last year and construction of the new building began in October - with a scheduled completion date at the end of 2016.

The development was being jointly undertaken by existing Tauranga-based landholder Manor Group TGA, in conjunction with Auckland-based developer and investor Watts Group Investments. Sister company Watts and Hughes Construction were building the premises at 306 Cameron Rd.

The development partnership was brokered by Russell Adams of Bayleys Auckland and Lloyd Davidson of Bayleys Tauranga.

Levels two and three of the new building will offer a new concept to the city's commercial leasing market. Mr Davidson said this concept was targeted to the smaller professional and creative companies of Tauranga, along with new businesses coming to the city.

"Typically these businesses have 10-30 staff and have found it difficult to secure international-quality space at competitive leasing rates," Mr Davidson said

"The 3rd Ave concept uses the international office trend of shared space - in a way where the tenancies share the front of house areas such as meeting rooms, seminar rooms and break out spaces for staff.

"The principal is about removing the costs of the minimally-used spaces such as meeting rooms and staff break out spaces for lunch and casual meetings which all tenants usually pay for at full lease rates, within their own tenancy.

"This concept enables tenants to reduce their office footprint to the bare minimum therefore their net lease costs are lower and they pay only a portion of the leasing costs for the less-used facilities, rather than the full cost." Mr Davidson said.

"There is no need to have six lunch rooms or 12 meeting rooms on one floor for six tenants for example. Those spaces are taken care of in the shared area. This practice significantly reduces their per square metre tenancy rate but at the same time increasing the access to more space.

"The shared space concept provides networking opportunities between the employees of complimentary professional service companies."

Mr Davidson said the shared space concept provided the opportunity for each tenancy to have large client functions within the 300sq m of communal space - something not normally provided for in a small to medium size space with a traditional fitout.

The level three floor plate of the premises had been conceptually subdivided into six separate tenancies - ranging in size from 100 - 410sq m with the shared street concept nearly 300sq m floor space. The flexibility of office configurations allows the full range of tenants and office sizes to be accommodated on one floor.

Level two has potentially four tenancies ranging in size from 138 - 215sq m, as part of a total floor plan of 1778sq m.

One and a half floors - some 3014sqm in total - have already been leased to a Government department under a confidentiality agreement. Manor Group was a previous tenant in the old building on the site, and will be moving back to the new premises on completion.

Leasing of the remaining space is being undertaken by Bayleys Tauranga. Leasing specialist Lloyd Davidson said naming rights for the building were still available to tenants looking to rent either or both of the upper two floors.

Mr Davidson said per square metre rates for the floor space would vary depending on tenancy size and terms of the lease.

"However, being a new build, state-of-the-art premises, able to be bespoke configured to a range of new tenants with its shared space concept it will be very competitive in the Tauranga leasing market, as you would expect," Mr Davidson said.

Bayleys Tauranga is also leasing the retail spaces at street level - ranging in size from 79sq m to 244sq m. Mr Davidson said negotiations with a cafe operator were well advanced.

"Facing directly onto Tauranga's busiest arterial road is a definite benefit for potential retail tenants - particularly as Cameron Road links the CBD to outlying suburbs.

Other major corporate entities in the nearby vicinity include ANZ, accountancy firms KPMG and Staples Rodway, solicitors Cooney Lees and Sharp Tudhope, Aurecon Engineering, and the headquarters of Bay of Plenty Regional Council.

Retailers within a 500 metre walking distance include a chemist, multiple cafes, home appliance stores Noel Leeming and Farmers, and two gymnasiums.

A Tauranga CBD commercial office report released earlier this year highlighted the growing divergence between the vacancy rates in 'prime' and 'secondary' quality buildings occurring in the heart of the city.

"There are very tight conditions prevailing for better grades of space - compared to rising vacancies amongst secondary properties," said the report, undertaken independently by Bayleys Research.

"This is prompting an increase in development activity to satisfy demand for better quality premises."

"The building has been designed with floor-to-ceiling windows facing to the north, east, south and west to maximise the available natural light.

Mr Davidson said additional car parking for staff working in the building would be available some 200 metres away.