Flexibility favours Quay tenants

The East on Quay complex is near Britomart and is well served by public transport. Photo / Supplied

Various office tenancies ranging from 62sq m to 612sq m are available in the East on Quay buildings at 32 and 34 Mahuhu Cres between Britomart and the Vector Arena.

Completed in 2002, East on Quay is a two-tower interconnected structure containing more than 7000sq m of lettable space. After two recent transactions by Colliers of 275sq m and 875sq m totalling 1150sq m, only 1900sq m remains unoccupied.

The first building at 32 Mahuhu Cres, has seven floors of lettable space totalling 3947sq m and is joined to its smaller, six-level, 3126sq m neighbour at No 34 via a central core.

James MacCormick of Colliers International, who is marketing the space to lease with colleague Matt Lamb, says new tenants in East on Quay would join other high-quality firms in the precinct including BNZ, Westpac and GE.

"All of the available spaces to lease are fitted out because that is where the demand is in the market," MacCormick says.

"Both structures have been built to an equivalent of the five-star National Australian Built Environment Rating System energy rating, which assesses commercial offices, hotels and residential buildings on the basis of their measured operational impacts on the environment.

Lamb says the building also offers a range of transport options. "It has a basement carpark for 69 cars and, due to being close to the Grafton gully, offers easy access to the motorway network."

Lamb also points out that because the complex is near Britomart it is among the best served buildings by public transport in the city. "This is being viewed as an increasingly important factor by landlords looking to make longer-term decisions," he says.

"As the rail network is improved, more stations are built across the city and the Government places further resource and emphasis on infrastructure development, many companies have identified that offices close to public transport are an ever more attractive option, both from an employees' perspective and for management."

The buyer of East on Quay in 2007 was Becton Property Group, a listed $2 billion Australian diversified property group with a strong record in development and construction, property funds management and retirement village ownership.

Lamb says Becton's flexibility has enabled them to put together deals other landlords would find difficult to make, including offering significant incentives package to meet the market. "One of Becton's strongest characteristics is that they take a long-term view and are willing to offer turnkey solutions, which is an attractive feature for the companies looking for new space."

Phuong Truong, Becton's asset manager, says the challenging climate that the company is operating in today is not dissimilar to conditions faced in the late 1980s and early 1990s.

"The diverse range of property classes and geographic regions in which Becton operates has helped lessen the impact of the global financial crisis," Truong says. '

'We are flexible with the terms and structure of deals. For example, short-term leases are acceptable and we are happy to provide rent-free periods to assist with relocation or meeting existing lease obligations. We are also prepared to consider annual occupancy costs for tenants as opposed to rate per square metre."

MacCormick says that apart from the 28,000sq m East Building complex under construction in Britomart and scheduled to come on-line in early 2011, there is about 139,000sq m of proposed office space in the pipeline, with estimated completion between 2012 and 2016. "Few if any will proceed without pre-commitment, and pre-commitment to the level required to secure debt-funding will be very difficult to achieve."

However, he says Colliers' September survey shows confidence levels have improved significantly in the Auckland market. "Landlords with good quality space, who are prepared to be flexible, will find tenants. Equally, tenants have the chance to take advantage of the market and lock in good deals now."