Precinct’s skyscraper development to start next year
Precinct Properties’ [NZX: PCT] $681 million Downtown Shopping Centre redevelopment will be known as Commercial Bay.
The listed property company is pushing ahead with a new 39-level office skyscraper, with PwC as the anchor tenant, and a revamped shopping centre on Auckland’s waterfront to be built by Fletcher Construction.
Commercial Bay will integrate the adjoining Precinct owned towers’ PwC Tower, AMP Centre, HSBC House and Zurich House, to create a new central business, entertainment and retail destination.
When it is finished, Precinct estimates 10,000 workers will occupy space within these five towers, each of which will have direct access to the retail centre.
More than 50% of the new tower has been pre-leased allowing Precinct Properties to start work in June next year.
Precinct says it has four businesses as foundation clients and negotiations are in train with a range of mini major retailers for the new shopping centre’s flagship stores.
The new development will be funded through newly established five year bank facilities.
Precinct chief executive Scott Pritchard says gearing is currently 12.5% which has been positioned to enable the project to be fully funded on commitment.
“Following the commitments to Wynyard Quarter stage 1 and to Commercial Bay, Precinct’s committed gearing is about 35%.”
The Downtown site was bought for $91.3 million and Precinct has subsequently spent $16.3 million in design and consultancy fees.
Precinct will spend a further $573.4 million to complete the development and will generate a yield on cost of 7.5% once fully leased.
On completion of the development, Precinct’s investment in Commercial Bay is expected to be worth a total of about $1.5 billion, representing 63% of the value of it’s portfolio.
Work is expected to begin in June next year with the demolition of the existing Downtown Shopping Centre.
The new Commercial Bay retail centre is expected to open by October 2018, with the office tower completed in mid-2019.
Precinct says the development will be the centre of a new precinct and revert to Commercial Bay, as it was first called when established as Auckland’s trading hub in the 1800s.
Mr Pritchard says the redevelopment is the most transformational project Auckland CBD’s has ever seen.
Not everybody is enamoured with the development. Part of Precinct Properties’ plans includes wresting a plan change from Auckland Council so it can extend the shopping centre to the edge of Queen Elizabeth Square on Queen St.
Auckland Council conditionally sold what it terms the “useless public space” of the square to Precinct Properties for $27 million last year. It will be settled if and when a plan change is granted.
Several Auckland architects have opposed the plan change – David Gibbs for the New Zealand Institute of Architects, Graeme Scott for the Urban Design Forum and Joel Cayford for the Architectural Association and Auckland Civic Trust.
They want the 1800sq m square left, redesigned and the buildings around it activated with cafes, shops and bars.
Mr Pritchard says Commercial Bay reshapes the waterfront area bounded by Britomart, the Viaduct and the CBD.
“The retail at Commercial Bay will be a laneway environment with about 100 shops, including international and domestic fashion outlets plus a number of restaurants, cafes and bars making the most of the waterfront location.
“The office tower will transform the city skyline, but most importantly has been designed from the inside out to create a world-class working environment for its occupiers.”
Mr Pritchard says the Commercial Bay project is consistent with the company’s long term strategy of maximising value through concentrated ownership of prime assets in strategic locations.
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