Wellington office rents
June 11th, 2008 at 9:03 am by David FarrarBernard Hickey has a blog post on how office rentals in Wellington have increased by 14% in the last year. This is around four times the rate of inflation and well above the rate of increase in Auckland. Why?
[Wellington] office vacancy rates are around historic lows. Encouragingly, vacancies are low across the board with the prime and secondary vacancy rate at 1.4% and 3.5%, although some low quality buildings are struggling to find new tenants after being vacated by large government occupiers.
Bernard explains this means they are going from $197 a square metre buildings into $330 a square metre ones.
This is not a one off either, rents have gone up a staggering 66% in the last five years. Why? Because of the massive growth in the public service.
There are few people who qualify better for the label rich prick, than Wellington commercial property owners. And one of them told me a few months ago that since Labour came to power he had made $400 million just in Wellington. Yes $400 million. He said it was almost enough to make him vote Labour!
The sad thing is these massive profits have not just come from the taxpayer, but all business owners in Wellington are getting clobbered as rentals keep increasing.
I suspect there is also a flow on effect to the costs of residential tenancies in the inner city as property owners can convert from business to residential and vice versa.
Related posts:
- Auckland Office available
- Wellington commercial property
- Insurance in Wellington
- 13 hectares of more bureaucrats
June 11th, 2008 at 9:30 am
Move the Govt to Auckland? You’ve got to be joking, let them stay in Wellington. There are many more highly paid
Vote:paid public servants in town than ten years ago. It has spilled over into residential rents in the greater Wellington area.
Retailers have benefited too. Just look at all the boutique shopping that never used to exist, even on streets with little foot traffic. There is more money around, & it is taxpayer sourced.
June 11th, 2008 at 9:35 am
Invercargill is the best place to shift Parliament. That would make “public service” mean something.
Vote:June 11th, 2008 at 10:04 am
The Auckland Islands are the best place to shift Parliament.
Vote:June 11th, 2008 at 10:05 am
Kill several birds with one stone. Disperse the CBD and put the big government employers out closer to where the majority of commuting workers LIVE. Reduce travel emissions. The irony of the burgeoning CBD and government departments, is that the authorities who create the zoning rules, in tandem with the main employer, the government, are making things WORSE for the environment.
Vote:June 11th, 2008 at 11:02 am
Interesting to note on page 2 of the CBRE pdf referenced by Bernard that consumer confidence in Wellington has dropped from being the highest in the country in December to negative territory in March. Perhaps a lot of the extra civil servants added by Labour are getting concerned about their employment security ?
Vote:June 11th, 2008 at 11:35 am
“Kill several birds with one stone. Disperse the CBD and put the big government employers out closer to where the majority of commuting workers LIVE. Reduce travel emissions.”
The Auckland model of dispersed workplaces does not seem to exactly reduce travel emissions… Instead of people catching an electric train going 80kph into the CBD they crawl from one far-flung suburb to another suburb on a hideously crowded motorway at about 10kph. Progress!
Rents have risen in Wellington but there are some massive office complexes due to finish in the next couple of years- for example the BNZ complex and the IRD’s new HQ are both simply huge developments. Couple this with the refurbishment projects for the old Vogel Building and the Bowen Street precinct, plus all the other miscellaneous consented and planned developments and the pressure will be on rents soon.
Vote:June 11th, 2008 at 1:07 pm
Many studies of commuter and other driving in cities in the US demonstrate that multi nodal cities which dispersed housing and job centres are the most efficient in terms of driving times and fuel consumption.
Auckland should have very little congestion but since the seventies we have been steadfastly refusing to build adequate roads.
Vote:A multi nodal city with arterial ring roads is the most efficient pattern.
You have to remember than in modern cities non work related trips are now the majority of vehicle trips and that is why public transport which always has to focus on the CBD (unless the multi nodes are sufficiently large to justify public transport of their own)
carries such a small percentage of total daily trips and this percentage will diminish rather than increase over time with the aging population and decentralisation via telecommuting etc.
June 11th, 2008 at 4:27 pm
Yes Owen, ACT a few years ago in one of their informative books, actually outlined a report on Auckland’s roading system that had been done by a firm of consulting engineers in the 1960′s. Only a fraction of the routes they said would be needed by 1980 have been done today, and the population growth is several times greater than the estimates they were using.
ukkiwi, of course a lot of time is spent snarled up on roads that are carrying most traffic round 2 sides of a triangle or 3 sides of a square to where they want to get to. If the direct routes that are needed actually got built, there would be a whole lot of cars off the existing overloaded routes.
No-one in NZ knows as much about this stuff as Owen McShane. But interconnected multi-nodes are obviously more efficient as a matter of sheer logic and common sense. If you want to reduce emissions and fuel consumption, it is far more effective to reduce average trip distances than to attempt to force mass commuting over the existing long distances.
I keep saying this, but a century ago, most people had a home and a workplace a manageable walking distance apart. You have to be soft in the head to suggest that zoning practices and city planning are not the main reason for changing that. Of COURSE there were good solid health reasons at one time, yet without the private motor vehicle, the increased standard of living consequent on separating homes and workplaces by greater distances would have been unachievable. Growth would have been so constrained by the inflexibility and economic inefficiency of public transport, had this been mandated rather than the freedom that was taken for granted in those days, that we would have been stuck in a Soviet-era lifestyle and economy.
But the public health reasons for keeping work zones and living zones so separate are no longer valid, as workplaces are no longer the foul, smoke-belching places of industrial revolution times.
Vote:June 11th, 2008 at 5:16 pm
Now I know why Wellington is shaped like a pig trough.
Vote:June 11th, 2008 at 5:32 pm
Phil;
There’s nothing soviet-style about my home, my job, or the high-tech bus (with low floors, wheelchair access and German automatic gearbox) that occasionally takes me from one to t’other when it’s too wet to walk.
I own a car too, but that has proven to be nowhere near as good as the alternative ways of getting to work each day.
What you ‘keep saying’ is that you don’t like using buses and you are determined to construct arguments that show they are bad for everybody.
Vote:June 11th, 2008 at 7:50 pm
I have persona experience of ‘node cities’ and they are fantastic – AS LONG as you have flat land, and high population growth. With cities of circa 3 million quite ‘normal’ in the US, and an acceptance of transformation of old city centres into entertainment and cultural centres, it’s not difficult to make the economics of node cities work. The nature of each node can be predetermined, with housing and local amenities geared to the income norms of the nodes they surround.
Here in NZ, we have a total population of a single significant US city, we don’t have the ability to retrofit one of our cities, even if there was one witrh appropriate land to do it. We lack population, captial, and the will to raise either; this idyllic scenario will not work for us, I’m afraid, but perhaps for our grandchildren. They may have fewer inhibitions about raising the population to the point of a reasonable domestic market, (say 10 million,) or using some of the Canterbury plains or somewhere similar to create a new city for them to occupy.
Vote:June 12th, 2008 at 10:19 am
Auckland developed as a multi nodal city – it was a group of villages more like London than New York, and actually still is a multi nodial city which the planners have been trying to reform into a radial monocentric city since the sixties.
Vote:When De Leuw Cather came from San Francisco to design our Auckland Motorway system they recognised that Auckland was multi nodal and designed an appropriate motorway system which would have created a belt around the ridge lines of Ponsonby, K Rd etc and served the CBD within the loop and equally places like Newmarket, Mission Bay etc outside the loop. They made two errors.
They did not appreciate the the Auckland City council (effectively the Queen St Businessmens’ Association) was paying the bills and always intended the motorway to discharge straight into Queen St and to hell with the other parts of Auckland.
The other was they worked off maps which showed a huge “Open space” just beside the Mt Eden prison which was the perfect location for the massive interchange to join up all the loops in the network. Unfortunately this open space was actually the Auckland Boy’s Grammar School, and the Chairman of the Board of Trustees was also Chair of the Transport and Planning Committee.
The rest is history.
Of course, inevitably someone asked why they could suddently reduce the size and scale of the motorway so much when nothing else had changed. This was a problem, so the wily old fox, sent out by De Leuw Cather to smooth all the ruffled feathers said “Oh well you could always build a system like BART (which they had just designed in SF) to take the excess.
All of us in the traffic design team knew this was just a PR joke, but sadly many at the time, and since, took it seriously.