Capital assets remain absolutely positive: analysis

While there’s no glossing over the fact the city has challenges ahead – largely infrastructural – the old ‘‘absolutely positively Wellington’’ refrain is still loud and strong in the commercial property sector.

Framed and constrained by hills and water, the capital’s city centre continues to evolve, albeit with the usual niggles that a major city faces as it flexes and grows.

Commentators are quick to home in on council tensions, new library options, discord over traffic through Lambton Quay, the broader Let’s Get Wellington Moving Again mantra, and – is the city really still the coolest little capital?

Bayleys Wellington Commercial director Fraser Press said despite the pandemic, CBD property sales volumes and values have not skipped a beat: leasing activity is buoyant and heavyweight private and listed developers are proceeding with multi-million-dollar projects region-wide.

‘‘Yes, there are some hurdles, but there’s a lot of collaboration going on with private and public entities in the central city. New development pipelines are triggering a flight-to-quality for large corporates who want high levels of amenity and superior seismic thresholds.’’

Bayleys’ retail sales and leasing specialist Jim Wana said there hasn’t been a lot of vacancy occurring across the key retail precincts and, aside from department store David Jones exiting the Wellington market, and some real pressure on some parts of the hospitality sector, retail is pretty much business as usual. ‘‘Despite the continuing rise of e-commerce globally, there’s still proven demand for physical retail space,’’ Wana said.

Press said the biggest surprise to come out of Covid-riddled 2020 was the resilience of the industrial sector which has attracted feverish attention from both seasoned and emerging investors. ‘‘Sub 5 per cent yields are commonplace now. Auckland’s industrial market trends have finally turned up here.’’

Latest figures show the Wellington economy created more job opportunities than any other region in the year to December 2020, largely due to more jobs being created in healthcare and the public sector as part of the pandemic response.

Strong city bonds

Willis Bond, the development company behind large-scale commercial and mixed-use projects across Auckland and Wellington, continues to be proactive in the capital. They have ticked off recent developments like Te Auaha Campus and the PwC Centre and have two more premium base-isolated projects on the go: the Victoria Lane project, and Site 9 building.

Willis Bond director David McGuinness said these latest projects are ‘‘progressing at a rate of knots’’ with estimated completion dates in 2022.

CBD energy

After more than 20 years in Wellington property development, Craig Stewart of Stratum Management still champions the CBD and continues to add to its fabric. In the Victoria/Dixon Street precinct, he has spearheaded multiple apartment developments. Pinnacle, the latest, is a sold-out 180-unit complex due to be completed shortly.

Stewart then has plans for a site in Thorndon and several others in the inner city. All of these residential projects have commercial/ retail usage at street level to service occupants of the apartments and workers in the city.

‘‘You need that convenience factor – hairdresser, laundromat, cafe´ , corner store – it’s what makes living in the city easy, creates vibrancy and it’s a win-win for the retailer and the residents,’’ he said. Build-to-rent

Private developer Alex Cassels is a proponent of the build-to-rent model which, globally, is one of the fastest-growing real estate asset classes. Designed to provide housing for long-term renters, with security of tenure and rents linked to the CPI for financial certainty, Cassels has partnered with the city council to provide hundreds of affordable rental apartments for a growing CBD working population.

At 195 Willis St, the council has signed a 15-year lease agreement for 52 apartments in the former Freemasons House building and Cassels said plans are underway for similar council partnerships at 203 Willis St, 53 Boulcott St, and another location.

Cassels said the strategic migrating of dated commercial office buildings into the residential market makes economic and social sense. ‘‘In recent years, we’ve acquired many well-positioned CBD office buildings that were structurally sound and didn’t require massive amounts of remedial work with the aim of conversion to accommodation.’’ Sydney effect

Sydney-based former Wellingtonian Stephen Sutorius and his development company Thames Pacific are behind Wellington’s largest inner city residential development The Paddington, under construction on a 7500 sqm site in Te Aro. The $130m project includes 152 low-rise freehold terraced houses with a thematic nod to Sydney’s iconic Paddington terraces, and many being marketed as live-work opportunities.