$1b Commercial Bay project delayed again, this time by six months

Commercial Bay (centre) is now rising near the waterfront.

New Zealand's largest property development, the $1 billion Commercial Bay on Auckland's waterfront, has been delayed a further six months.

Precinct Properties told the NZX today of a "revised completion programme" for the project in an update presented in its six-month result where net profit after tax rose 57 per cent from $162.1m last year to $254.9m for the June 30, 2018 half-year.

"In our February result, we talked about retail opening at the end of Q1 2019 so it's moved out by six months," Precinct chief executive Scott Pritchard told the Herald this morning.

The new 18,000sq m 120-shop retail would now not open until September next year, Precinct said.

This latest delay announced today is the second revealed by Precinct. Last year, the company said in its annual result presentation out in August 2017 that instead of opening all its Commercial Bay shopping centre in late 2018, it now had a new programme and most of the retail wouldn't open until the first quarter of 2019.

That missed the crucial Christmas 2018 deadline, it was reported at the time.

Pritchard said today Swedish clothing chain H&M would still open in Commercial Bay on August 30 this year "but the remaining retail won't open till September 2019. What we're seeing is Fletcher, like many other main contractors, are having real capacity issues."

Precinct's stock exchange notice said the completion programme provided by Fletcher Construction had been reviewed by Precinct's expert programmer, RCP, which confirmed the revised dates are achievable subject to the main contractor's performance.

Precinct said it remains confident in the provisions of its construction contract, which protect Precinct from losses due to contractor delay. This will protect the company against the impact on Precinct from any loss of income and other costs over the delayed period.

Precinct was keeping its new tenants informed and working closely with retailers, it said. Occupiers of the new PwC office tower had existing lease terms which extended beyond the revised completion dates of the office tower, Precinct said.

Precinct's result said its portfolio value now stood at around $2.5b after strong revaluation gains.

"The last financial year has delivered another strong result for our business," Pritchard said.

Of the delays at Commercial Bay, he said: "It's disappointing to be six months late but in three, four, five or 20 year's time, we will not focus on being six months late."

Construction of the tower, planned to be 39 levels, has now reached level 31, he said. Tenants in that tower include PwC, Chapman Tripp, MinterEllisonRuddWatts, DLA Piper, Marsh and Spaces.

Asked today how much Precinct could claim from Fletcher on the contract being late, Pritchard refused to name any sums or say whether it was in the millions of dollars.

"I won't get into the amounts. It's very standard to have clauses where the owner or developer is protected when the builder is late."