As the largest owner of premium inner-city business space in New Zealand’s two biggest cities, Precinct Properties knows a thing or two about workspaces. Right now, the listed commercial property investor is in the midst of a major development programme that is set to change the cityscape in downtown Auckland for the better.
Love your Workspace caught up with the calm and astute CEO of Precinct Properties, Scott Pritchard to hear how things are tracking and understand how he and his team are seemingly able to take it all in their stride.
What makes Precinct tick and how has the culture changed since you started in 2010?
There have been a lot of changes in culture in that time and it’s our number one priority in many ways. A big part of it is to acknowledge success and celebrate it.
That doesn’t mean being at the pub every afternoon at 4pm but it is simply about recognising the contributions individuals make.
We had six people when I started and we’re in the mid-50s now, so we’ve grown tenfold and as that’s happened we’ve been very focused on building a cohesive team with the right people in right roles. The biggest challenge is to maintain a mindset of a culture amongst a small group of people and embed that across 50 or 60 people.
I learnt a lot about this from Murray Barclay at Auckland Airport in my very early years and then later at Goodman Property as part of an expansionary phase led by John Dakin. My personal belief is you don’t want anyone in a business that tries to control everything. If you can collaborate effectively you get the best outcomes.
Commercial Bay is a huge project for Precinct, and downtown Auckland full stop. What excites you about it?
The exciting thing is the challenge of it as we’re literally redeveloping an entire city block.
When you take something like that on the reward is enormous, but the risk is as well, from a financial perspective but also from a city perspective so you really want to do the opportunity justice.
For these reasons from early on our view has always been that good is never going to be good enough – it has to be great. Commercial Bay always started as an office tower and then through the acquisition of QE Square and the HSBC building we were able to leverage our footprint and ended up with a mixed-use development where the value of the retail space is equivalent to half the project.
Personally, I don’t think Aucklanders know yet how good it’s going to be. The merging of civic space, retail and a food and beverage offer that will be second to none, all into one concentrated location is really going to put Auckland on the map.
Above: Render of Commercial Bay, retail precinct
Commercial Bay, from an office perspective what trends are you seeing in terms of workplace design and occupier needs, and how have you incorporated this into the new PwC building?
We designed the tower from the inside out, starting with the floor plate and worked out the best way to design, 1,400sqm. This led us to a design with three columns which was a real feat from a structural engineering perspective but provides unencumbered space for occupiers without the need for consideration for core or fire stairs.
This remains our biggest competitive advantage and has seen us already lease two-thirds of the space. Of all the occupiers there’s only two offices, the rest being open plan which highlights just how big the shift in how businesses use their workspaces really is.
Precinct clearly have a lot on their plate at present; what would you say is your biggest challenge?
The biggest challenge currently not just for us but for the industry is how much the construction market is under pressure and there is simply not enough labour to do all work touted. For our part we put a high priority on good relationships with contractors and subbies and the fact we have lots of different work has been critical in terms of maintaining relationships, as they can see a pipeline of work and the advantages of working with us.
It will be interesting to see how the new Labour led Government deals with this as you can’t restrict immigration too much as the economy is reliant on getting skilled labour in. There does need to be more time to educate and prioritise trades though as without improvements in construction capacity, we’ll end up with more cost escalation which can stymie growth and for us it underpins valuations due to replacement costs.
The addition of Generator to the business appeared to be a very strategic move. Did you actively pursue them and are you starting to realise any of the perceived benefits?
We did pursue Generator because until the point we made the acquisition we had no occupiers less than 200-300sqm effectively meaning we held a portfolio of assets that didn’t serve the largest employment base in New Zealand – SMEs. We’re very pleased we did.
Given what has happened in other markets internationally with flexi space and the more agile approach corporates are taking with their operations, it’s great we now have exposure to this developing market. In other major cities anywhere between 5-8% of the office market is in co-working so there’s definitely room for growth.
What drove the involvement in Wynyard Quarter and does parking and connectivity come into it?
We observed five to six years ago there was a real demand from major corporates for a slightly fringe space. Here we were as an office space investor focused on CBD and in that situation you can either defend against or participate in it. We chose to participate and on completion the value of our assets there will be $400m (11-12% of the portfolio).
In terms of public transport, we’re encouraged by Government preference for light rail. Yes, the area will need some car parking but equally in the last few years public transport use has increased 40% to 55%, so Aucklanders are generally getting on board with public transport.
Do you have any exciting projects we do not know about that you would you like to tell us about?
Wynyard Quarter Stage 2 is certainly going to be great. We’re also excited by the prospect of developing 1 Queen Street into a range of uses with the potential to include a hotel along with current office space.This will provide another fantastic level of amenity for Commercial Bay.
In Wellington the balance of surplus land at the Bowen Campus, provides us with an exciting potential mixed-use development opportunity of somewhere between $600-700m.
Where are we headed and what does the future of work look like from a workspace point of view?
10 years ago everyone thought we’d all be working from home, but we’ve seen in the last five to six years that people really like being around other people.
The benefits of agglomeration are becoming really evident. It’s all about providing space that offers the opportunity for people to be around other people, to benefit from bump business, have amenity close by and provide things that are really convenient and a little bit exciting.
That’s the approach we’ve taken with Commercial Bay, Wynyard Quarter and Bowen Campus and the concentration of ownership across multiple buildings and sites has been key to driving outcomes from an amenity perspective.
We’ve also seen lot of businesses squeeze up and put more people into less space. At the end of the day though it’s all about nurturing talent and you can’t push that barrow too far.
We’ve seen some amazing workplace design ideas come through for Commercial Bay and regardless of activity-based working or any models, it comes back to getting a good functional space that values people and allows them to engage with others.
Above: Render of Commercial Bay, new PwC Building
On a personal note where do you go and what do you do to relax?
Surfing in many ways is how I tune out from work and I recently went on a great trip to Indonesia. I also put a high priority on family and watching kids play sport.
We have a massive focus on getting a healthy worklife balance at Precinct whether it’s exercise or spending time with friends. When you have the thick end of billion dollars of developments on the go it can be stressful so it’s important to do these things.
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