A new office block at downtown shopping site could be worth up to $300 million, says company

A 41-level, 71,000sq m, $300 million office block for 3000 people with more than 100 shops beneath could rise on Auckland's waterfront.

AMP NZ Office chief executive Scott Pritchard said that following last week's $90 million purchase of the Westfield Downtown Shopping Centre, options were being examined for a huge new building there and talks were already being held with an architect.

One or two towers are being considered, he said.

But reaction from the public to a tower of this height is yet to be gauged because although Westfield gained consent for development, it was never built due to the economic downturn.


"You don't often get a 6500sq m site in the CBD," Pritchard said.

"Westfield already had resource consent for a 41-level tower," he said.

"We don't know if we will build that. It will be very much dependent on the demand but the size of the site means it might not be just one tower.

"How we develop it is something we will assess over the next two years."

Any new tower could be worth $200 million to $300 million, he estimated, making it the company's most valuable asset. "The shopping centre at the moment is 15,000sq m," he said, but demand for a much larger shopping centre - even as much as possibly 100,000sq m - was feasible due to location and site size.

"I guess that's the opportunity we recognised on the site," he said.

Many people had asked about the escalators because one near the food court had not operated for some time.

"There's a programme of work under way for the escalators which will be fixed in the next two months," Pritchard said.

"The escalators are very old and so it's about finding parts for them and I guess there's been a reluctance to replace them now."

Institutional investors have already expressed their support for the deal by the business which is changing its name to Precinct Properties New Zealand but critics have wondered why a business wholly focused on owning premium-grade offices would buy a shopping centre. Pritchard encouraged people to look at the site's potential for what could be New Zealand's premium office tower.

Other critics have referred to Sir Bob Jones' quip that investors should do the opposite of what AMP does.

"My reaction to that is that we're not AMP. I don't think Bob was referring to us when he made that comment many years ago.

"There's always confusion about the AMP brand and that's why we're changing our name," Pritchard said, referring to rebranding the business, originally floated on the NZX in 1998 as AMP NZ Office Trust.

On Friday, the business distributes its annual report, carrying the new name, he said.

Talks with Westfield had been going on for two years, "ever since I started here", but there was no pressure to build on the land immediately, he said. "It's an asset that generates a nice holding return," he said, referring to the 7.6 per cent yield on the purchase price, equating to around $6.8 million annual rental from tenants.

"We've had some preliminary discussion with an architect in terms of what we can get on the site," Pritchard said, indicating that talks were with an Auckland, not Australian, firm.

The property is surrounded by others owned by AMP NZ Office: Zurich House at 21 Queen St, facing Queen Elizabeth II Square, the PWC tower on the corner of Albert and Quay Sts, and the AMP Centre on the corner of Albert and Customs Sts.

Westfield Downtown is already linked to the PWC tower by an airbridge over Albert St and Pritchard indicated a strong desire to create further links between the AMP properties.

"The location is obviously pretty important for us and there's potential to interconnect the buildings on the waterfront and build to traverse that whole downtown precinct," he said.

"We're quite supportive of the [Auckland] Council's direction in the City Centre Master Plan."

AMP was also keen to work with the council on the planned demolition of Westfield Downtown to allow the new Central Rail Link to be sunk beneath the reclaimed land to make the crucial connection from Britomart up Albert St.

"Until we've got certainty around that, it's going to be very difficult for us to countenance any development," Pritchard said of the demolition and plans for the rail link.

Auckland councillor Cameron Brewer encouraged co-operation between parties. "The secret is for the council to work well with AMP who hold all the cards," Brewer said.

"We don't want to reach a stalemate and be forced to buy the undeveloped site off them at an inflated price."

Prior to the purchase by AMP ratepayers were being lined up to buy the block to make way for the rail link, and most of the $110 million allocated for property acquisitions could have been needed, he said.

Westfield Downtown

*Located at 4 Albert St and 27 Customs St.

*Four-level concrete block opened in 1975.

*Airbridge across to the PWC Centre.

*Site of only CBD outlet for The Warehouse.

*Sold to AMP NZ Office for $90 million.