Offices take on a life of their own
Under-used office buildings can be repurposed for housing, and many developments are coming to the market showing what can be done, finds Miriam Bell.
The pandemic-prompted shift to remote work has left many questioning what will happen to the office space left vacant as a result. Many people believe converting offices to housing seems an obvious solution, especially given the country’s ongoing struggle with supply shortages.
But repurposing commercial properties into space that meets the building requirements for housing is not as easy as it might appear.
Bayleys head of insights Chris Farhi says successful conversions are tricky and challenging. ‘‘They are controlled by the bones of the building, and they often involve sophisticated design issues that need to be resolved.’’
Developers have to take this, plus code compliance and seismic requirements necessary, and weigh up whether the costs involved make it worthwhile. For some, starting from scratch with a new build makes more financial sense.
Colliers head of research Chris Dibble says buyer demand is another consideration. Auckland has high demand for suburban apartments, but many conversions involve repurposing CBD office space for the lower end of the market.
‘‘That doesn’t necessarily translate into a product there is high demand for, because the CBD is suffering from no tourism, no international students, and a severe depletion of CBD life. That impacts on developer decisions.’’
But office conversion has been a growing trend over recent years, in line with the desire for more supply to be built, and when life returns to greater normality post-pandemic, there is no doubt it will start pushing up again, he says.
‘‘In the office market internationally, there is a trend in CBDs for an increase in quality as a percentage of the overall market stock. Auckland and Wellington have a significant amount of secondary space.
‘‘This stock lends itself to being converted into residential space as new, higher-quality offices push it out of the office market, and that is something we will see more of in the coming years.’’
Despite this, there is still strong demand for high-end conversions of office buildings in prime locations, Dibble says. A good current example of this is Lamont & Co’s latest project on Carlton Gore Rd in central Auckland.
The Domain Collection involves the conversion of Fidelity House, the former headquarters of insurer Fidelity Life, into a residential precinct featuring 69 luxury apartments across two buildings. The apartments will range in size from 67 square metres to 421sqm, and prices are expected to start at $1 million and go up to $8m-plus for penthouse suites.
The existing seven-storey building will be extended and rejuvenated, and a new sixstorey building will be built behind it. The penthouses will have unencumbered park and city views, as well as three-car garaging, and the two buildings will be connected via a ‘‘secret garden’’.
Designed by Warren & Mahoney, it is in a premium location directly opposite the Auckland Domain, with Newmarket and Parnell on the doorstep. The University of Auckland’s Newmarket and
Grafton campuses and Auckland City Hospital are also close by.
Warren & Mahoney associate principal Peta Nichols says there are always challenges in converting commercial spaces into homes, and on The Domain project, tracking down the original plans was one of them.
‘‘While the structure and framework of the building inform the design, the issue is you have to upgrade an old building to meet the current codes and standards, and this guides what you can do.’’
But conversions have significant benefits, she says, particularly higher studs. ‘‘In this project, there is 3.5m floorto-floor in the front building. That means 2.9m to 3m ceiling heights. That’s attractive in a spatial sense.’’
Repurposing buildings is also more environmentally friendly than building from scratch, she says because it avoids the demolition phase, decreases the amount of carbon associated with new materials, and means less steel and concrete is needed.
After working in London where conversions of commercial space into residential is common, Nichols is keen to see more such projects in New Zealand. ‘‘They’re a bit thin on the ground now, but I think we will start to see more of them.’’
Another example of a highend commercial conversion hitting the Auckland market soon is the 18-storey Cab building in Aotea Square in the central city. Formerly the longempty Auckland Council Administration Building, developers Love and Co have transformed it into an 118-apartment block.
Apartments range in size from 56sqm to 600sqm. Prices range from $678,000 for a onebedroom city pad to $2m for a three-bedroom residence and $16.5m for the last remaining full floor penthouse. It has a pool, a gym, a cinema/media room and undercover parking.
It will sit in the middle of a new precinct called the Civic Quarter, which has space for three new buildings. Another apartment tower is planned, and the developers hope the precinct will eventually include an arts centre, a high-end hotel, and hospitality and retail options.
Love and Co managing director John Love says the challenges involved with conversion projects depend on each individual building, but while work on the CAB had been demanding, it has been worth it.
Commercial buildings wellsuited to conversion often have unique characteristics, tend to be in prime locations, and have crucial infrastructure and transport hubs in place already, he says.
‘‘The Cab is a landmark structure with a place in architectural history as the country’s first ‘skyscraper’, for example. It is also in an incredible location in the heart of the city, will be right by the city rail link when it’s completed, and it’s close to Ponsonby.’’
In Wellington, a number of central city office conversion projects are in the works. JLL’s Wellington agency head, Stathis Moutos, says many of them are being carried out by The Wellington Company, which was a repurposing pioneer.
One of the company’s highprofile conversions was the Te Ka¯ inga Aroha apartments on Willis St. It was a joint project between the company and Wellington Council, in which the council took the head lease on the completed apartments and rented them out at comparatively affordable rates.
Moutos says The Wellington Company has conversion projects under way in Willis St and Boulcott St, and has also transformed the four-storey Trojan House in Manners St into a 22 boutique apartment complex.
Earthquake strengthening and seismic considerations are big concerns so if an office building needs extensive work, it can be worthwhile to look at it more broadly and repurpose it as residential space, he says.
‘‘Wellington’s rental market is extremely tight, so there is demand there for new supply. And the compact nature and walkability of the city makes apartment living attractive, so the trend is likely to continue.’’