Property: Between the Devil and the CBD

“Now if I was a law­yer and I did a bad job on a con­tract,” says Wil­lis Bond’s man­aging dir­ect­or Mark McGuin­ness, “people don’t have to look at that con­tract and walk past it for 20 or 50 years. If you’re a prop­erty developer and you do a bad job, res­id­ents of the city have to look at that for the next 50 or 100 years… If it’s done well, it can be delight­ful, and we all feel bet­ter for it, and if it’s done badly, every time you see it, you feel a bit sick in your stomach.

“So I feel there is a big onus on prop­erty developers to do it right,” he con­tin­ues, “or to get out of the business.”

Wil­lis Bond, The Wel­ling­ton Com­pany, the Chow broth­ers, Pre­cinct Prop­er­ties, Primeprop­erty Group and Mark Dunajtschik rep­res­ent the major prop­erty heavy­weights in Wel­ling­ton. Are they ‘doing it right’? Accord­ing to The Wel­ling­ton Com­pany dir­ect­or and Prop­erty Coun­cil pres­id­ent Ian Cas­sels, New Zealand’s “chron­ic atti­tude to prop­erty developers” sees them “held in a sim­il­ar regard to pir­ates”. McGuin­ness sheds some light on this with his asser­tion that “Com­pared with oth­er pro­fes­sions, developers tend to be more indi­vidu­al in their out­put… his­tor­ic­ally in New Zea­l­and [they] have ten­ded to do their own thing.”

US soci­olo­gist Dav­id Harvey’s essay ‘The Right to the City’ presents an inter­est­ing coun­ter­point to this state­ment. “The ques­tion of what kind of city we want,” states Har­vey, “can­not be divorced from that of what kind of social ties, rela­tion­ship to nature, life­styles, tech­no­lo­gies and aes­thet­ic val­ues we desire. The right to the city is far more than the indi­vidu­al liberty to access urb­an resources: it is a right to change ourselves by chan­ging the city. It is, moreover, a com­mon rather than an indi­vidu­al right.”

The notion of com­mon rights is enough to make any developer shud­der — or any­one who shares their interests, like former may­or Kerry Pren­der­gast, who has char­ac­ter­ised the com­munity voice as “schizo­phren­ic”. Prop­erty law­yer Steph­en Franks shares this view, stat­ing that “Developers shape all vibrant cit­ies. Plan­ners and con­sensus pro­cesses often pro­duce sterile spaces, with what people think (and say) they want. Suc­cess­ful developers often have a bet­ter idea of what they actu­ally prefer, and make the trade-offs between wishes and what can be afforded… with super-profits for the suc­cess­ful, and fail­ure, this weed­ing fork is the way dynam­ic cit­ies evolve.”

Bond, Willis Bond

Two of the evid­ently har­di­er ‘weeds’ in Wellington’s prop­erty ter­rain and developer net­work are The Wel­ling­ton Com­pany and Wil­lis Bond, hav­ing both left their mark through numer­ous game-chan­ging pro­jects in part­ner­ship with the council.

“Our his­tory demon­strates three fairly brave pub­lic thor­ough­fare pro­jects,” says The Wel­ling­ton Company’s Cas­sels: “Umbrella Park [from Cuba through Cornhill to Vic­tor­ia], Leeds/Eva through the bot­tom of Han­nahs, and Left Bank — con­nect­ing Vic­tor­ia to Cuba. These were all under­taken with lim­ited resource and low return, but will all be extremely valu­able to the long-term intens­i­fic­a­tion of Wel­ling­ton.” On Wil­lis Street, The Wel­ling­ton Company’s Con­ser­va­tion House and Tele­com build­ing “are major con­trib­ut­ors to the city’s green build­ing stock,” says Cas­sels — Wellington’s top-rated build­ings for energy being Meridi­an Energy’s head office onthe water­front and Mark Dunajtschik’s Aster­on Centre on Feath­er­ston Street.

The Wel­ling­ton Com­pany is cur­rently work­ing on an invig­or­a­tion of neg­lected coastal gem Shelly Bay, although they nor­mally spe­cial­ise in office build­ings. The com­pany was estab­lished in 1990 with the pur­chase and occu­pa­tion of Invin­cible House in Wil­lis Street: “The 1980s had seen a glut of com­mer­cial office build­ings con­struc­ted, and by 1990 the prop­erty bust had well and truly arrived with many com­mer­cial build­ings selling at a quarter of their 1987 peak,” remem­bers Cas­sels. “We were par­tic­u­larly attrac­ted to the value that res­id­en­tial brought to the city and the huge amount of sense that ‘liv­ing in the city’ made.”

Wil­lis Bond, a com­pany much loved by the city coun­cil, are attrac­ted to the same prin­ciple — and also born in 1990, with McGuinness’s pur­chase and trans­form­a­tion of the old Clar­en­don Tav­ern on Tarana­ki Street into Molly Malone’s pub. They have since focused on mixed-use, high-end res­id­en­tial build­ings: Chews and One Mar­ket lanes are also their work, along­side a big chunk of our water­front. Queens Wharf, St Johns, Mac’s Brew­ery, the NZX, Clyde Quay apart­ments and now Site 9 and Site 10 are all Wil­lis Bond babies.

The com­pany won the Clyde Quay con­tract after Wel­ling­ton Water­front put the old Over­seas Pas­sen­ger Ter­min­al site out to tender in 2005. It was then the biggest non-gov­ern­ment devel­op­ment pro­ject in the coun­try, and was pas­sion­ately pro­tested and appealed by Water­front Watch. One-and-a-half years at the Envir­on­ment Court and the glob­al fin­an­cial crisis delayed com­mence­ment of con­struc­tion by LT McGuin­ness — Mark McGuinness’s con­struc­tion com­pany of choice — to 2012. The cur­rent build­ing, now almost com­plete, is worth almost $180 mil­lion, 71 of its 76 apart­ments selling for between $1.3 mil­lion and $6 mil­lion a pop. Wil­lis Bond owns all the com­mer­cial ten­an­cies on the ground floor.

Earli­er this year, the com­pany got the green light for anoth­er ambi­tious water­front com­plex on Site 10 — the former Shed 17 loc­a­tion — des­pite ini­tial sub­mis­sions to coun­cil num­ber­ing 97 for and 99 against the designs. The Envir­on­ment Court rejec­ted ini­tial plans, respond­ing to sub­mis­sions with a rul­ing that the building’s height should not exceed 22 metres. Cur­rent plans are for a 25.7‑metre build­ing, but as a con­sol­a­tion, the con­ten­tious upper (sixth) storey has been alloc­ated for pub­lic usage. The com­plex is due for com­ple­tion in 2017.

At the same time, Wil­lis Bond will be erect­ing apart­ments on top of Farm­ers as part of their Cuba/Dixon Street corner pro­ject, which meas­ures 8,000 square metres, twice the size of Chews Lane. Con­firmed new occu­pants Wel­Tec and Whitireia poly­tech­nics, “will cer­tainly help reju­ven­ate that part of town,” says McGuinness.

“It’s a won­der­ful oppor­tun­ity to redevel­op that part of Cuba,” he adds, “but the chal­lenge is not to lose the essence of what makes Cuba Street spe­cial. It’s got a little grit, it’s got a little bit of a quirk, it’s just a col­our­ful, char­ac­ter­ful part of town that is on a human scale and there is a lot of char­ac­ter, both in terms of the people and the buildings.

“How do you deal with the fact that all those build­ings on the site need to come down, oth­er than per­haps the facades so you keep the older look, but at the same time keep it small and on a human scale?” McGuin­ness asks. The incor­por­a­tion of lower build­ings and a lane are two solu­tions, “and really just mix­ing up the uses so that there’s some­thing for everyone”.

Bick­er­ing bedfellows

Cas­sels dreams of a Wel­ling­ton with a super-city coun­cil that’s a “dream to work with” — but con­sid­er­ing that developer agen­das and pub­lic interest often clash, espe­cially when it comes to build­ing fea­tures like height, anchor ten­ants, usage and advert­ising bill­boards, should it be that easy? Should the coun­cil roll over in front of every developer-dir­ect­or with deep pock­ets and a six-storey blue­print with ‘act­ive edges’ prom­ising ‘eco­nom­ic growth’?

Accord­ing to coun­cil­lor Andy Foster, “While a lot of people don’t like the word ‘developer’… some­body has to take the risk, put the money togeth­er, the team, the designs… developers play a crit­ic­al part in cre­at­ing the city that we use.

“If we didn’t have developers,” he adds, “we’d all be stand­ing out in a field.” Foster is enthu­si­ast­ic about cur­rent coun­cil fin­an­cial sup­port of Mark Dunajtschik’s con­ven­tion centre oppos­ite Te Papa, which will also boast a five-star lux­ury Hilton hotel.

Though on the developer end of the deal, law­yer Steph­en Franks says work­ing with the coun­cil “can involve stu­pid and opin­ion­ated people who have none of their own money at risk, get­ting a chance to impose pref­er­ences that are expens­ive and add no value, but which developers have to go along with. Much of the her­it­age wor­ship has that ele­ment. People who fear the future cling to the status quo, so our best archi­tects and developers are con­fined and forced to do dreary con­ven­tion­al stuff.”

So should the coun­cil and developers be col­lab­or­at­ing? While Foster says, “Abso­lutely,” Michael Macaulay, asso­ci­ate pro­fess­or in Vic­tor­ia University’s School of Gov­ern­ment, cau­tions that “in gen­er­al most people would agree that col­lab­or­a­tion and part­ner­ship work­ing are good ideas. Not only because they tend to be bet­ter value for money, but simply because they can be more pro­gress­ive and cre­at­ive in their approaches. The key ele­ment, though, is that col­lab­or­a­tions must take into account a suf­fi­cient range of views or else the danger is that col­lab­or­a­tion can slip into cartel.”

 

 

More moguls

There are, of course, more — and some would say bet­ter — ways to cap­it­al­ise on prop­erty than to devel­op. Prop­erty heavy­weight and shit-stir­rer extraordin­aire Sir Bob Jones fam­ously abhors the risk of devel­op­ment, pre­fer­ring to buy, pamper anchor ten­ants, and then kick back with a cigar as their rents increase whilst shoot­ing the breeze about the rights of land­lords, the won­ders of pav­ing and why women shouldn’t drive.

Jones formed RJ Hold­ings in 1961, mak­ing his way up the ‘prop­erty lad­der’ as earth­quake demoli­tion and mar­ket dereg­u­la­tion cre­ated a Wel­ling­ton prop­erty boom in the 1980s. RJ Hold­ings is now not only New Zealand’s largest private CBD office build­ing own­er, but also one of our biggest private cor­por­a­tions, with assets in excess of $1 bil­lion and a port­fo­lio of more than 23 buildings.

Auck­land-based Pre­cinct Prop­er­ties has a size­able office port­fo­lio too, as the self-pro­claimed “largest own­ers of premi­um inner-city busi­ness space in Auck­land and Wel­ling­ton”. The NZX-lis­ted com­pany has 7,800 share­hold­ers and $1.64 bil­lion in assets, includ­ing a great deal of The Ter­race: the Min­istry of Health build­ing, Pas­tor­al House, May­fair House, and Cap­it­al on the Quay at num­ber 125.

Primeprop­erty Group’s invest­ments are also wide­spread, with some prop­er­ties in Hamilton and Coro­man­del, though most are in Wel­ling­ton city, with a num­ber also on The Ter­race. The group lim­it neither their geo­graph­ic nor real-estate interests, which pur­portedly extend to a par­tic­u­lar enthu­si­asm for selling bill­board advert­ising on their build­ing exter­i­ors. They own and oper­ate numer­ous car parks, res­id­en­tial sites, hous­ing estates and hotels, includ­ing Abel Tas­man Hotel, Cent­ral City Apart­ment Hotel and the his­tor­ic St George, pre­sum­ably out­bid­ding Chow Group when the lat­ter was up for grabs.

Nation­al Busi­ness Review rich listees John and Michael Chow, after whom Cour­tenay Place’s fam­ous J&M’s takeout is named, have sim­il­arly wide, though per­haps more stra­tegic­ally integ­rated, interests — and more than $2 bil­lion worth of real estate and chick­en-salted fries under their belts. They own 70 per­cent of Wellington’s sex trade, includ­ing Mer­maids, Il Bor­dello and Splash Club, with a pur­por­ted 100 sex work­ers on their books. This doesn’t stop Kerry Pren­der­gast from hail­ing them “Great Wel­ling­to­ni­ans” who con­trib­ute to the eco­nomy whilst “giv­ing back to the com­munity” through Exodus gym and their spon­sor­ship of Team Wel­ling­ton, Saints, Fire­birds and Round the Bays.

The broth­ers envis­age con­trolling a $1 bil­lion empire with­in a dec­ade, expand­ing on a port­fo­lio that already includes the West­pac build­ing on Lamb­ton Quay, Vivi­an Street’s Brendan Motors, Whitireia Poly­tech, hotel accom­mod­a­tion, Tory Street’s Exodus gym and sur­round­ing retail com­plex (minus one pre­vi­ously pro­tec­ted kōwhai tree), and a planned 15-storey hotel and brothel com­plex on the Palace Hotel site oppos­ite Auckland’s Sky­City Casino. They also own a Wil­lis Street com­plex includ­ing Wilson Park­ing, La’ Shi­ka Bridal, and the Cap­it­al Mar­ket food court recently launched with the aid of deputy may­or Justin Lester.

Anoth­er well-known fam­ily invest­ment team are the Papageor­gious, who leased the former Espresso­hol­ic café site until it was booted out of Cour­tenay Place. At time of writ­ing, the Papageor­gious’ entire $20 mil­lion port­fo­lio is up for grabs, and includes a num­ber of her­it­age build­ings on Cour­tenay Place, as well as Cuba, Tory and Ori­ent­al Parade. There has been spec­u­la­tion about their inca­pa­city to redevel­op risky pur­chases or meet earth­quake-strength­en­ing costs — but per­haps the liquid­a­tion of this lar­ger fam­ily trust simply test­i­fies to the par­tic­u­lar effect­ive­ness of the more sin­gu­lar pat­ri­arch­al mod­el of oth­er developers and investors.

“If you put 1 and 1 and 1 togeth­er, you actu­ally make 4,” says Andy Foster, dis­cuss­ing how value is gen­er­ated in urb­an con­texts through col­lab­or­a­tion, par­tic­u­larly between coun­cil and developers, and through prox­im­ity. “You get some bene­fits of people work­ing togeth­er and bump­ing into each oth­er in the street, and hav­ing some of those social and eco­nom­ic trans­ac­tions that add value,” he says.

“People spark off each oth­er. Put a whole lot of people togeth­er, there’s a cross-fer­til­isa­tion of ideas,” he con­tin­ues. “That’s why we have cit­ies: you have trans­ac­tions that are not just of goods and ser­vices, but ideas. That’s what cit­ies are about.”

Wel­ling­to­ni­ans make this a city of tal­ent, he seems to sug­gest, just by liv­ing and work­ing here togeth­er. We just hap­pen to depend on a bit of pro­act­ive mega­lo­mania to build the stage on which all our tal­ent-shar­ing fizz-pop becomes possible.

 

[info]

Wil­lis Bond began their work in Wel­ling­ton with Molly Malone’s. They have recently com­pleted Clyde Quay wharf, and are respons­ible for the Queens Wharf, Wel­ling­ton Brew­ing Com­pany, NZX, Free Ambu­lance Build­ing and Xero House water­front devel­op­ments, with One Mar­ket Lane under con­struc­tion, Site 10 recently signed off and their Cuba/Dixon pro­ject also in the works. Chews Lane, Transpower House on The Ter­race and Grant Thornton House on Lamb­ton Quay are also Wil­lis Bond’s. 

The Wel­ling­ton Com­pany’s cur­rent major pro­ject is Shelly Bay. They also own Tele­com Cent­ral, Con­ser­va­tion House and ASB Bank House.

Chow Group own and run the CMC build­ing on Cour­tenay Place, as well as Mer­maids. On Vivi­an Street they own Whitireia Per­form­ance Centre, Brendan Motors, Il Bor­dello and Vivi­an Street accom­mod­a­tion. Chow own Exodus gym and the sur­round­ing real estate on 131–139 and 147–161 Tory Street. They have recently opened the Cap­it­al Mar­ket on Wil­lis Street next to their Wilson Park­ing lot and La’ Shi­ka Bridal. The West­pac build­ing is also owned by them.

Mark Dunajtschik has been respons­ible for a num­ber of large devel­op­ments in Wel­ling­ton. The most sig­ni­fic­ant are Aster­on Centre, prin­cip­ally occu­pied by IRD at the Rail­way Sta­tion end of Feath­er­ston Street, and the HSBC Build­ing, which is pre­dom­in­ately occu­pied by the Min­istry of For­eign Affairs and Trade. He also owns the quake-prone Har­courts Build­ing, des­pite try­ing to fob it off to the His­tor­ic Places Trust for $1, and is work­ing with coun­cil on the con­ven­tion centre.

Pre­cinct Prop­er­ties are Auck­land-based and own mul­tiple sites on The Ter­race, includ­ing 1–3 (Treas­ury), Pas­tor­al House and May­fair House, 44–52, 80 and 125 The Ter­race. Deloitte House on Brandon Street, 171 Feath­er­ston Street, Bowen Cam­pus, the State Insur­ance Tower, and Cent­ral on Mid­land Park are also Precinct’s.

Primeprop­erty Group own at least 16 office build­ings in Wellington’s CBD, as well as oper­at­ing hotels, apart­ments and car parks. On The Ter­race, they own num­bers 39, 120 and 139. They also own vari­ous build­ings on Wood­ward Street (2), Feath­er­ston Street, Moles­worth Street (55–61), Wil­lis Street (124 and Abel Tas­man Hotel), Lamb­ton Quay (86–90), 85–87 Ghuznee Street and Vic­tor­ia Street (86 and Cent­ral City Apart­ment Hotel). 

Bob Jones owns Kirk­c­al­die & Stains and the sur­round­ing Bay­leys and RESIMAC build­ings, as well as Lamb­ton Quay sites Leg­al House, Pub­lic Trust Build­ing, Lamb­ton House, Wood­ward House and num­ber 342. Pen­car­row House on Jer­vois Quay, Sol­net and 73 The Ter­race, and Feath­er­ston House, City Cham­bers and Wel­ling­ton Cham­bers on Feath­er­ston Street also belong to RJ Hold­ings. 

Maurice Clark has under­taken much redevel­op­ment, includ­ing the former Defence House in Stout Street, the Tower Build­ing on Cus­tom­house Quay and a couple of con­ver­sions from office build­ings to stu­dent accom­mod­a­tion. 

Kiwi Income Prop­erty Trust own The Majest­ic Centre, 44 The Ter­race and the adja­cent 56 The Ter­race, which is about to be redeveloped for the Min­istry of Social Development.

Argosy own the DIA Build­ing on the corner of Lamb­ton Quay and War­ing Taylor Street, Stew­art Dawson’s Corner, NZ Post House, the Defence Build­ing in Stout Street (recently pur­chased from Maurice Clarke) and 8 Wil­lis Street.

Oyster Prop­erty Group owns the Fujitsu Tower, Eagle Tech­no­logy House and the cur­rently out-of-action James Smith Carpark.[/info]

 

 

Who should fund earthquake strengthening?

Mark Dunajtschik, own­er of the Aster­on Centre and cur­rently col­lab­or­at­ing with coun­cil on a con­ven­tion centre com­plete with a lux­ury five-star Hilton hotel oppos­ite Te Papa, tried to demol­ish Wellington’s 85-year-old Har­courts Build­ing. After being ordered to bring it up to code, he offered the build­ing and asso­ci­ated costs to the His­tor­ic Places Trust for $1.

Bob Jones, too, fam­ously thinks that earth­quake strength­en­ing should be fun­ded by gov­ern­ment. “Now mor­ally if they change their minds they should pay for it,” he told The Nation. “That hap­pens every six to eight years, and now they’re going to do that again but they don’t pay for it, they don’t offer interest free loans, they don’t even allow us to deduct that cost”.

Wil­lis Bond dir­ect­or Mark McGuin­ness takes a dif­fer­ent view. “Most of the build­ings that are yel­low-stickered now were [known] earth­quake risks 25 years ago,” he says. “A lot of people bought build­ings know­ing that they’re earth­quake risks. So to then ask cent­ral gov­ern­ment or the loc­al gov­ern­ment for money to help strengthen them, it’s almost cre­at­ing mor­al hav­oc in my view. You buy a run-down house in the sub­urbs and then turn around to cent­ral gov­ern­ment and say, ‘Can you give me some money to help fix it up?’ That doesn’t feel very fair to me.” Fin­an­cial assist­ance should only be giv­en in excep­tion­al cases, he says.

“If you own prop­erty that needs updat­ing, it isn’t news, and you’ve got to accept respons­ib­il­ity for doing that work. If you’re not will­ing to do it, you should sell it to someone who will.”