AMP's CBD exit: Will more Kiwis work from home or return to the office?

Blair Vernon, AMP Wealth Management chief executive, says moving out of the CBD is not a cost-saving exercise. Photo / Supplied

AMP's New Zealand managing director Blair Vernon says its decision to move out of the Auckland and Wellington CBDs is not a cost-saving exercise but a genuine move to provide more flexibility to staff - and he believes other businesses will be looking to do the same.

But Scott Pritchard, chief executive of Precinct Properties, the owner of the Auckland office tower where AMP currently resides is not so convinced that businesses will exit city centre offices en masse.

AMP Wealth Management announced this morning it was looking to exit its office space in Auckland and Wellington CBDs.

It has around 300 staff based over three floors in its Auckland office as well as naming rights on the building on the corner of Albert St and Custom St.

In Wellington, it has one floor of office space in the Spark building in Willis St,with around 50 staff.

Vernon said there were a lot of conversations going on between businesses and their employees about whether they would return to the office or continue to work from home at the moment.

"The challenge is to what extent are they prepared to take the leap."

Vernon said AMP wanted to change its whole approach to flexible working rather than building off the starting point of everyone being in the office and then making exceptions.

He said the hardest part was not getting front-line staff to work from home but the executive level.

"It has to flow through to everyone."

"We will all be doing it."

Vernon said a lot of its workers had to commute up to an hour or hour and a half to get into the office, and by decentralising it was making it easier for staff.

The company set up an Albany office on Auckland's North Shore a few years ago and would look to lease an office in Mount Wellington or Penrose once it had sub-leased the Auckland space. It will also give up its naming rights on the building.

Vernon said the company had seen its productivity remain the same or improve over the lockdown period.

"We just don't think productivity is driven by onsite appearances. It's about the tools you are using and the clarity of goal setting."

Precinct Properties chief executive Scott Pritchard. Photo / File

But Pritchard remains confident office workers will come back to the CBD.

"From my perspective I think what we will see is a workforce that is more agile," he said.

That could mean if someone doesn't have an 8am meeting they will be able to work from home and check emails and then drive into the centre once the peak hour traffic resides.

"At one extreme end we might have the odd company, like AMP, making decisions like this."

But he said generally businesses that wanted to create value and attract talented workers would retain office spaces.

"If you want to attract really good talent ... those people don't want to work from home they want to work in an environment where they can learn off their colleagues."

Pritchard said offices were still "absolutely critical" as that was where companies developed their culture and enabled collaboration.

He said the AMP move would mean the company would "attract certain types of workers".

"I am still strongly of the view people are social, they are wanting to be in an environment that is exciting to be in, and generally that is not your dining table."

Pritchard said Precinct had had a massive response from tenants since the move to alert level 1 and it was expecting a "pretty full shop" in its offices from next week.

Vernon said AMP was optimistic about sub-leasing the CBD office space but realistic given the current economic climate.

"We are ready to go pretty much straight away."

A survey of its staff found just 8 per cent did not want to work from home at all, while 22 per cent wanted to work at home all the time and 70 per cent a mix.

Vernon said it was largely young people in flatting situations who were reluctant to work from home but those who did not want to work from home would have the option to come into the new offices.

"We are not saying you must be there [at home]. Staff are welcome to come to the corporate premises."

AMP will move out of its Auckland and Wellington CBD offices. Photo / File

The new office would be more about having a meeting space than rows of desks and it would ensure teams got together in person on a fortnightly basis for training, development and problem solving.

Asked about how it would manage the extra costs for staff of working from home, like power and heating, Vernon said it had not found that to be a problem to date as staff were making other savings through lower transport and childcare costs.

In terms of cost-saving for AMP, Vernon said it wouldn't help its bottom line until 2022. He said sub-leasing and moving was not cheap.

"It is a costly exercise, it is certainly not going to give us any tail wind in facing the challenges we have seen in 2020 or 2021."