Trans Tasman stacks space on tower site

By ANNE GIBSON, Property Editor

Trans Tasman Properties is accumulating building space on its Auckland office tower site, but warns that it is not about to start the $100 million tower.

It applies today to transfer heritage floorspace from its Queen St building to the Shortland St development site, alongside the new Royal & SunAlliance tower.

The Auckland City Council compensates building owners and developers by allowing them to transfer heritage floorspace or air rights from an historic building to a new site.

TTP (Landmark House) seeks council approval today to transfer 2256 sq m of floorspace from its historic Landmark House at 185-189 Queen St - formerly known as the Auckland Electric Power Board building - to 28 Shortland St, site of the former Auckland Star building but sold to Trans Tasman associate Seabil in 1994 for $6.1 million.

"Previous applications have already transferred 9150 sq m from the donor site," says a report by John Stoupe and Mark Vinall, the council's central area planning team.

The deals have given Trans Tasman an extra 11,406 sq m of floorspace for the Shortland St site. This is additional to the amount allowed under the district plan.

But Trans Tasman development manager Andrew Lamb said the movement of transferable development rights (TDRs) was simply "an accounting exercise" and not a signal that the 30-level tower was about to move off the drawing-board.

"This is just a transfer of the TDRs from the heritage site onto the Shortland St site because we wanted to accumulate them on one site.

"It's being done now because we're coming up to the year's end and we are just using the development site as a bank, because it already has TDRs transferred to it.

"At this stage, the tower is still on hold," Mr Lamb said.

In July last year, Trans Tasman chief executive Don Fletcher halted the proposed tower spanning the Shortland-Fort St site, saying the market was not ready and the cost of finance was too high. The company had already drawn up plans and talked to tenants.

"The cost of capital for property companies, depending on who they are, ranges from 9 to 11 per cent. But the cost of borrowing money to build is also between 9 and 11 per cent, so if you're lucky you will break even," Mr Fletcher said.

But at the just-topped-off PricewaterhouseCoopers Tower on the waterfront, AMP is taking a $20 million development profit.

"The tower cost $150 million to build but is projected to be worth $171 million, so the difference is the development profit," said Rob Lang, executive manager of AMP NZ Office Trust.

AMP bought space from above St Matthew-in-the-City in Federal St and moved it to the waterfront, allowing it to meet the rules for building the 34-level tower.