Precinct to update on CBD project

Precinct Properties' new 38-level glass tower to be built on the Downtown development site near the waterfront.

NZX-listed landlord Precinct Properties will this month announce progress on leasing its $550 million 38-level Downtown project.

Scott Pritchard, chief executive, said the business would announce a result before Christmas but will go ahead only once it has 50 per cent tenant precommitment.

Widespread market speculation is that cornerstone tenants in some surrounding buildings will shift into the tower. That could include lawyers, financial services firms and accountants.

Precinct owns a group of towers within one block opposite the waterfront - PwC Tower on Quay St, HSBC House at 1 Queen St, Zurich House at 21 Queen St, the Downtown shopping centre between Lower Albert St and Lower Queen St and the AMP Centre on the Lower Albert St/Customs St West corner.

Forsyth Barr's Jeremy Simpson said the company was poised for action on a number of fronts. It was capitalising on tight vacancy in Auckland and Wellington and increasing market rents and valuations in Auckland.

Its prime assets should continue to benefit from further valuation and rental increases providing net tangible asset improvements, Simpson said.

"Precinct has committed to stage one of its Wynyard Quarter development with 70 per cent pre-committed. The project has a total cost of $83.6 million with an expected fully leased rental of $6.7 million (8 per cent yield on cost) and an expected valuation of $98.2 million once complete," he wrote in an update.

"Precinct remains upbeat on Auckland CBD market conditions and has cited good feedback from occupiers with respect to pre-commitments. Final negotiations have commenced with regard to Bowen Campus in Wellington.

"In June, Precinct announced that four of its five buildings have been approved to enter the negotiation phase of the Wellington Accommodation Project Tranche 2, and that 1 The Terrace remains under consideration."