KEY POINTS:
A $30 million A-grade office building to go up in Balfour Rd, Parnell, represents an entry into the property development industry for construction company NZ Strong.
The company is driving the construction of a four-level B28-30 building and its sale in strata titles in a joint venture with
Balfour Projects.
The building will have 4000sq m of office space spread over four floors and 144 secure basement car parks on a 2132sq m site. The upper office floors will have extensive decks with panoramic views of the harbour.
Colliers International sales brokers James Thorburn and Tony Allsop and Barfoot & Thompson agents Richard Bowker and Wayne Muir are selling the high-stud, large open 1200sq m floorplates, which can be used for quality character fit-outs.
Allsop says the floors can be sold in their entirety or strata titled into two or three units. There is potential for 10 tenancies. Any configuration can be considered because there is a central core and the floors can easily be subdivided. There is also showroom potential on the ground floor, particularly for high-end homeware or similar stores.
Strata-titled office floors are in demand by owner-occupiers and investors as affordable investments, Allsop says. The floors are suited to medium-size companies wanting a strong commercial identity and to control their own business strategies and targets.
Companies are also demanding a more sustainable and efficient office environment. Globally, green buildings are increasingly on the agenda of investors, developers, owners, tenants and shareholders.
NZ Strong and Balfour Projects are targeting a four-star green rating for the Balfour Rd property.
"We have sharpened up the green aspects of the building, particularly the fade efficiency for natural light and comfortable climate control, water conservation, minimal energy consumption, high-performance insulation and design of the basement structure," says NZ Strong managing director Shane Brealey.
Work on the 12-month project will begin at the end of this year when two houses on the site are demolished. It is planned to have a covered pedestrian link from B28-30 through the former Industrial Research property to Kenwyn St and on to St Georges Bay Rd while construction is in progress.
Balfour Projects had been working on the development alone until early this year, when resource consent was granted.
"We were approached by Balfour Projects, essentially a one-man band, to combine our design and building skills with their resource-consent plans for the site," Brealey says. Balfour Projects will step back and take a passive role in the venture. Brealey, Jamie Vallance and Mark Welch - formerly with Multiplex - formed NZ Strong three years ago and, in that time, the company completed 18 projects on time and within budget for blue-chip clients.
Major projects include refurbishing the Union Fish building at Britomart for Bluewater, construction of The Crossing office building at Highbrook for Goodman International (formerly Macquarie Goodman), the Auckland Netball courts at Mt Wellington Quarry, the Otahuhu Recreation Centre and work at Aotea Centre for Auckland City Council.
"We are a builder at heart and that is our core business, but the Balfour Road project had a resource consent, a definitive timeframe to market, and was the best development proposition we had been offered," Brealey says:
Timing was also a factor in NZ Strong's decision to take on the development. "The building will be available in a commercial market that has little else coming on stream until 2010. There will be a shortage of new A-grade space next year and nothing else with any resource consent and construction certainty is on developers' drawing-boards."
Parnell is one of Auckland's oldest suburbs and Thorburn says B28-30 represents the high end of the St Georges Bay commercial precinct. It is right in the centre of creative Parnell and its design, advertising, architectural, lifestyle and textile businesses.
Thorburn says the characteristics of the property include commanding views, stud height, high car-park ratio, green features and highly rated building specifications.
The building is suited to artisan companies. It is out of the hustle and bustle of the CBD yet close to public transport and the motorways and a short stroll from Parnell's cafes and designer shops. The proposed link to Kenwyn St gives the development a St Georges Bay Rd address.
NZ Strong is keen to undertake projects similar to B28-30 by invitation, rather than seeking its own development opportunities. "We bring strong design, resource consent and building skills to a project."
Brealey says the company has targeted commercial and industrial work and consciously kept away from the residential apartment market where the quality of sub-contractors is sometimes questionable. "We are not a big construction machine that has huge overheads and needs to be fed."
The company has 25 staff at its head office and 100 employees in related companies.
Brealey and his partners bought two mid-size subcontractors to give a modicum of control over steel and concrete prices.
"The central element driving a development is getting a building's skeleton up within a predetermined time frame," Welch says. "Controlling those crucial sub-trades gives us confidence and the ability to finish a development within budget and on time."
Moves to buy related companies will be pivotal for companies such as NZ Strong that are gaining a foothold in infrastructure work.
"There is at least a decade of work involved in Auckland infrastructure projects alone," Vallance says. NZ Strong has made its first move in the field by winning construction contracts for three park-and-ride bus stations on the North Shore busway project.
