More Fonterra job cuts have raised questions about whether the dairy giant will need all the space it has leased in new upmarket Auckland headquarters.
Fonterra was due to move more than 1000 staff into the new HQ on Fanshawe St but today it announced 750 job cuts, up from a previously announced figure of 523, resulting in savings of $103 million a year.
The business is to shift staff from its Princes St headquarters off Shortland St, down towards the waterfront to a new purpose-built premises on the corner of Fanshawe St and Halsey St.
The new building is nearing completion and well before the job cuts, Fonterra took on a 15-year lease with two eight-year rights of renewal.
Shane Solly, portfolio manager and research analyst at Harbour Asset Management, said the job cuts certainly raised issued about the amount of space Fonterra would now need.
"Fonterra's productivity push may reduce their head office space requirements. Modern office work practices might also result in lower work space requirements," Solly said.
However Chris Dibble of Colliers International, said Auckland office space was in extremely short supply, particularly in the best A-grade buildings.
"From a research perspective, vacancies at record lows have provided tenants with the impetus to hold on to some under-utilised space," he said, with many planning for expansion in the near future.
"The economic momentum is still in place and the additional office space may not be available in six to nine months time when it is needed," he said.
In 2013, Fletcher Building and Goodman Group announced a $500 million four- to five-building commercial office precinct near Auckland's waterfront.
Greg Pritchard, Fletcher Construction's Building + Interiors general manager, said Fonterra was set to be the first business to lease premises on the site, which the country's biggest builder would put up on the block bounded by Fanshawe, Daldy, Gaunt and Halsey Sts, excluding Caltex Fanshawe St.
The two companies saw the area near Wynyard Quarter as having so much potential that they planned a premium-grade, eco-friendly, mini-office suburb on the city's western fringes, potentially attracting many other businesses. "The idea is that the site will be developed into four- or five-building sites," Pritchard said at the time "The site allows for 50,000sq m of development, and Fonterra will take up approximately 12,000sq m of that."
Since then, the Singaporean government has bought into the precinct, via its Government Investment Corporation .
John Dakin, Goodman chief executive, referred to an NZX announcement when that business first bought into the Fonterra development.
"We can confirm it is a 15-year lease as per the attached NZX announcement when GMT first acquired the building. In terms of numbers of people moving into the building you would need to ask Fonterra about that - the original statement says more than 1000," Dakin said.