Building sector revving up for bank projects

Artists' impressions show the proposed cone-topped ASB building on the Wynyard Quarter waterfront. Photo / Supplied

Two big Auckland City bank office construction jobs worth $230 million are about to get underway, giving the building sector a big boost.

The projects will see ASB shift north from the CBD in a $154.4 million Wynyard Quarter project and ANZ stay where it is but in a revamped ANZ Centre where $76 million is going on capital expenditure.

Fletcher Construction, already busy in Christchurch with the Earthquake Commission mandate and finishing its $1 billion Crane Group takeover this week, scored the ASB project, where work has already started, but expressions of interest are still being drawn up for the ANZ job.

Scott Pritchard, chief executive of landlord AMP NZ Office, said yesterday that tender calls were about to be issued to construction firms for his $76 million ANZ job designed by John Coop, a principal and shareholder in Warren and Mahoney.

Pritchard said the jobs came at a time when building was in a lull. The work was beneficial to the construction sector after the disappearance of most tower cranes from the city's horizon since 2008.

It was also good for Auckland's office accommodation sector. Instead of a new high-rise tower being developed, existing space was being refurbished which would not suppress rents and increase vacancy rates across the city, Pritchard said.

Westpac is also moving out of the PricewaterhouseCoopers on Quay St and into its new tower built by Hawkins Construction for Peter Cooper's Cooper and Company.

ASB economist Chris Tennent-Brown said the building sector was slowly recovering from the low point reached during the recession but activity continued to track well below the peak and the Government tended to be the main client for new work.

Any improvement in non-residential construction during the last year was largely driven by public project construction, he said.

During 2010, the largest increase in building work values came from the construction of hospitals and nursing homes and large declines were recorded for the value of commercial, factory and industrial buildings.

"The ASB HQ is one of the only major projects that will expand office space in the Auckland CBD over the next couple of years. That ANZ can get enough office space in the ANZ tower and carry out a refurbishment rather than build from scratch is saying something about high office vacancies.

"Those vacancies, combined with only slow employment growth, makes me think that Auckland CBD construction activity will remain low in the year ahead," Tennent-Brown said.

Pritchard said further big tenant moves were under way at AMP's 151 Queen St tower, formerly the IAG Building, on the Queen/Wyndham St corner where leases have been signed after insurance staff moved into the NZI building near the Viaduct.

AMP has leased space at 151 Queen St to $1 billion landlord Goodman Group which shifts later this year out of the Q&V Building. SAP and Swire Shopping have also leased space in the tower at 151 Queen St.

AMP will itself shift out of its $91 million AMP Centre on the Albert St/Customs St West corner and into level seven of the rapidly filling $65.7 million energy-efficient glass-clad block at 21 Queen St.

Diagrams in AMP's interim report show creation of the new ground-level annex structure to gain entry to the ANZ tower: an oblong glass-roof entry foyer built to front Albert St on the tower's waterfront side.

That will create a grander and easier entrance to the tower's lobby.

AMP said in its report that retaining ANZ would have a positive effect on projected vacancy rates, rental growth prospects and values across the Auckland CBD office market.

The landlord's tower at 21 Queen St is now 63 per cent filled and naming rights have been sold to a new tenant but remain secret in the meantime.

Shane Solly of Mint Asset Management praised AMP saying governance and management changes were delivering early benefits to investors and tenants.

"Also the risk to returns from Auckland CBD office has reduced with ANZ not building a new tower," Solly said.

But the biggest construction job is ASB's move to the Westhaven end of the waterfront. Kiwi has put a $154.4 million tag on this work: a $126.2 million build with a projected completed value of $138.5 million, plus an upfront one-off payment of $15.9 million ground rent for an initial 90-year term on the leasehold land.

The new energy-efficient building was designed by Australian BVN Architecture, formerly Bligh Voller Nield.

Kiwi said ground works would start in the first quarter and construction by June, ready for the bank to shift when its new lease starts in June, 2013.

BIG BUILDS

ASB - $154.4m NEW HQ
* Where: Jellicoe St, waterfront
* Landlord: Kiwi Income Property Trust
* Builder: Fletcher Construction

ANZ - $76m HQ REFURBISHMENT
* Where: Albert/Federal/Swanson St
* Landlord: AMP NZ Office
* Builder: Tender calls about to be issued