Precinct Properties keeps its developments rolling with another $100m building in Wellington

Thursday, 19 November 2020

Precinct Properties will soon be building two new office buildings at once at 40 and 44 Bowen Street, near Parliament. Above is an illustration of where the two new buildings will be.

Big inner city developer Precinct Properties is keeping its developments rolling, announcing another $100 million office building in Wellington.

The commitment comes after Precinct’s completion mid-year of its biggest property development, the $1 billion Auckland Commercial Bay office and retail development which included a 39-level tower.

Precinct is already constructing a $90.2m seven-level office building at 40 Bowen St, near Parliament, and the $100m companion building at 44 Bowen St is expected to start next year.

The big office landlord with about $3b in assets in Auckland and Wellington said demand remained high in the capital’s CBD for prime office buildings despite the talk about the impact of Covid-19 and working from home on city centre office space.

Precinct chief executive Scott Pritchard says demand is high in central Wellington for prime office space.

* The Dunbar Sloane building in Wellington central is being converted into co-working space

* Revamped Charles Fergusson Tower new home for Ministry of Primary Industries

The construction team started working on the piles for a new seven-level building at 40 Bowen Street in central Wellington a few months ago.

Both buildings are part of the Bowen Campus stage 2 development. The first building is expected to be completed in the third quarter of 2022 and the second at 44 Bowen in the second quarter of 2023.

The two buildings would cost about $195m, Precinct chief executive Scott Pritchard said in a statement to the NZX.

The second building will have eight levels of office accommodation totalling about 11,549 square metres of lettable office space including the ground floor. There will also be some food and beverage retail and storage.

Together 40 and 44 Bowen St will provide about 21,000sqm of office space.

The redevelopment of The Bowen State building, now called Defence House, was completed in 2019 by Precinct Properties.

Precinct has already completed the redevelopment of two other large buildings in stage one of the Bowen Campus development. They are the Charles Fergusson building leased to the Ministry for Primary Industries and Defence House, formerly The Bowen State building, leased to the New Zealand Defence Force.

Large accountancy firm KPMG has committed to leasing two floors, about 25 per cent of the second building's office space, for 15 years.

That, together with the 72 per cent of 40 Bowen St pre-leased by EY, Fujitsu and Generator, meant the two building projects’ office space was 50 per cent pre-leased.

Both buildings would be 5 Star Green Star rated and would share a common entrance lobby and basement facilities including carparking.

“The total project cost for 40 and 44 Bowen St is expected to be around $195m and is expected to yield 6.6 per cent once fully leased,” Pritchard said.

Securing another high-quality corporate occupier like KPMG reinforced the demand for the location and for quality office space in the Wellington city centre.

He was confident both buildings would be fully leased before completion given that leasing enquiries remained elevated in the capital.

In its Auckland and Wellington portfolios Precinct had continued to have solid demand. The company had completed 10,000sqm of leasing transactions in Auckland and Wellington since June 30.

No further clients had notified Precinct of an intent to reduce floor space and the majority of occupiers had now returned to their offices, he said. A few of its tenants have told Precinct they are looking to sublease a total of 6000sqm.

Despite the high level of uncertainty within the economy, Precinct remained confident its strategy, supported by high occupancy levels, long lease terms and high quality clients, would continue to deliver returns for shareholders, Pritchard said.

He confirmed Precinct expected its dividend for the 2021 financial year would be 6.5 cents a share, 3.2 per cent higher than the previous year.