Wayne Brown wants Auckland Council to exit leases: Moving in, anyway

Ceremony held this morning to mark completion of the new Munroe Lane building at Albany. Photo / supplied

Around 600 Auckland Council staff will this week start moving into new $147.5 million purpose-built premises at Albany despite the council led by Mayor Wayne Brown wanting to cut office occupation to prune costs.

Asset Plus, managed by ASX-listed giant Centuria, this morning held a formal ceremony with iwi to mark completion of new six-level offices at 6-8 Munroe Lane.

The council is leasing around half the ground floor and levels three, four and five, an Asset Plus spokesman said.

In April, the Herald reported the council trying to make a five-building retreat, with commercial agents appointed to sub-lease the many floors including part of that new Albany building.

This year’s council cost-cutting budget - called the council’s most important in 10 years - under Brown, saw job cuts to address a $295m hole. He wanted to sell Auckland Airport shares. In the end, after nearly two days of debate, councillors agreed on a budget that included selling a partial airport shareholding.

Foyer inside the new Munroe Lane by Asset Plus at Albany. Photo / Supplied

The council also spotted potential savings by reducing rent bills, decamping from floors within its own inner-city headquarters, as well as four other blocks where it pays commercial landlords millions in rent.

A council document stated rationalising corporate premises meant it wants to sublet:

1. Level five of Albany’s 6-8 Munroe Lane, car parks to be confirmed, the new six-level building where around 600 council staff will work;

2. Levels six, seven and eight of the 31-level Auckland House, 135 Albert St. Each floor is 1205sq m so it wants to quit about a third of a hectare all up. Car parking to be confirmed. The only building in this list of five that is council-owned. A decade ago, it spent $157m fixing leaks and refurbishing floors, slammed at the time by Cameron Brewer as “pure madness”;

3. Levels six and seven of the offices at 167 Victoria St West, a total of 2040sq m plus eight car parks in leased premises on the corner of Nelson St just up from Fanshawe St;

A ceremony was held this morning to mark the completion of the new Munroe Lane building at Albany. Photo / Supplied

4. Level five of the ex-Vodafone HQ, 20 Viaduct Harbour Ave, the curved glass building on Viaduct Harbour Holdings’ leasehold land at the Fanshawe St/Halsey St corner across from Fonterra’s HQ, and car parks to be confirmed in what is now Auckland Transport’s headquarters, another leased building;

5. The ground floor and level one, 82 Wyndham St at the Nelson St corner, 46 car parks, also a leased building owned by NZX-listed Argosy Property

Today, a council official confirmed the big move to Albany.

Staff are leaving regional offices in the north and west for the new block, Robert Irvine, the council’s general manager corporate support services, confirmed today.

“Around 600 staff will move to the new Albany site from the Orewa and Henderson offices and teams previously based at Takapuna. Staff will commence moving to Albany from July 27. Council staff who live on the North Shore or surrounding areas will also have an opportunity to work in a pilot zone at the Albany site, on a trial basis,” Irvine said.

Auckland Council staff will from Friday start moving into the new Albany building by Asset Plus. Photo / Supplied

Asked about progress exiting other office spaces, Irvine said: “There has been good interest in the sites we offered to the market. We are in the final stages on the agreements for sub-leasing a floor at 20 Viaduct Harbour Ave and exiting the leases at 82 Wyndham St and 167b Victoria St West. We had interest in 135 Albert St, but have put this on hold given the need to accommodate staff from the leased premises we are exiting.”

At Albany, the new Munroe Lane building is around 65 per cent leased to the council. It has 224 car parks and was originally due for completion in November last year, according to Icon Construction from Australia which built it.

The council is now the head tenant, taking nearly two-thirds of the block on an initial 15-year lease with two six-year rights of renewal, meaning it could occupy the planned premises through till 2046.

It had called for expressions of interest for its new northern service centre from developers for an entirely new north-west hub. It got bids from developers at Silverdale, Smales Farm, Westgate, New Lynn and Albany.

Asset Plus won that bid and the Munroe Lane building is the result.

Part of it dates back to a building the council once owned and where hundreds of council staff worked in the CBD.

In 2019, Asset Plus announced it had bought the council’s Auckland CBD service centre at 35 Graham St. That is the block above Fanshawe St in the Victoria Quarter. The council said it would sell the block for $58m to reinvest in new service centres.

But last year, Asset Plus ditched plans for 35 Graham St where it planned to add extra levels.

Instead, it said it had sold the block to a private investor for $65m. That was to an entity owned by Mansons TCLM, although the vendor didn’t say who it had sold to.

The settlement date is December 1 this year, subject to the purchaser’s right to extend that to December 1 next year.

“The transaction provides Asset Plus with future balance sheet certainty past the Munroe Lane development window, eliminates all leasing and development risk at 35 Graham Street, and mitigates any capital constraints for the company on the 35 Graham Street property,” Asset Plus said last April.

Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.