New Zealand's largest family-owned commercial property developer has delayed a $500 million Auckland commercial development, saying now is not the right time to start construction.
Culum Manson of Mansons TCLM said the 12-level 30,000sq m new office block planned for the ex-NZME site at 46 Albert St had been put on hold temporarily due to coronavirus and the changed commercial environment.
"Albert St would be a three-and-a-half year build. I'm still talking to people but it would be 12 levels and about 30,000sq m.
"We were going to start about now. But we've decided to put that off for a little while to just wait and see what the market does. It's a big one and rather than crack into the construction, we just thought we'd put it on hold and see if we can pick up a customer," he said referring to a tenant.
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Mansons would begin building only after pre-leasing in this current environment, he said. Usually, the business builds with no tenant signed up in advance of construction.
"We'll build it if we get a customer. We normally spec-build these things as you know but for that one, it's so big that we thought we'd pause it; but we are doing other projects in the meantime."
He cited the pandemic and its economic effects as the reason for the delay.
"It's fair to say there's a lot going on economically at the moment, so charging into a $500m development without a customer - we thought we were better off just waiting and seeing what happened before we did that."
Mansons bought the NZME site for $40m around 2014 and recouped most of that by on-selling a portion: "We sold a quarter of it for $31m and are retaining the remaining three-quarters for development," Manson said of the corner hotel site.
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NZME left the site in 2015. A $200m-plus project is now under way by EVEN Hotel Group to develop a new hotel on the Wyndham St/Albert St corner beside the site retained by Mansons.
In 2018, the Herald reported plans for the EVEN hotel due to open in 2020 in a 37-level tower, which is also to include a Holiday Inn.
Manson said the family company was currently completing two new blocks worth about $500 m at the western fringe of the CBD.
"We're still building offices. We've got Fanshawe St one and two," he said referring to 155 Fanshawe St and 136 Fanshawe St.
The block at 155 Fanshawe St in front of Datacom House is leased to KiwiBank, Southern Cross and others while 136 Fanshawe St, near the Halsey St intersection and opposite the Viaduct Harbour, is leased to Meredith Connell, 2degrees and others.
A multibillion-dollar Asian investment business bought those two blocks as well as AA Insurance House not far away for $700 million. PAG Group, formerly known as Pacific Alliance Group won consent to buy from the Overseas Investment Office.
Australian media have forecast around $50b could be wiped from the office market in its major cities. Devaluations are forecast to hit the sector, as workforces devolve to working from home.
Offices are seen by some as the new version of cruise ships, for how tightly packed workers are on to floors.
But Manson said the business remained confident and would begin building a new office block at 110 Carlton Gore Rd, Newmarket.
"We're about to start that later on this year," he said.
It has also just finished new offices in St Georges Bay Rd, Parnell, next to its existing headquarters. That new building is Manson own new headquarters. Staff have now shifted in.
Manson forecast demand for office space to continue, saying many businesses still needed new premises.
"People are still using offices. They were working from home in the alert level 4 lockdown but they're been returning," he said.
Mansons had noticed a trend for more employers to offer flexibility to staff. like the option to work partly from home, partly from offices.
"But, equally, people are spreading out more on the floorplates - people working in shifts," he said.