Capital gains

2022 is shaping up as a watershed year for Wellington. After years of seismic strengthening, transport bottlenecks and dealing with ageing infrastructure, the city, once dubbed the “coolest little capital”, has its eye firmly on reinventing itself.

Wellington city has a current population of about 217,000 that is predicted to grow by up to 80,000 by 2050 with an estimated 25 percent more people commuting to the CBD daily. When it comes to coping with that, there is no shortage of vision from Wellington’s leaders, but the high-profile completion of Transmission Gully isn’t the only complex road to navigate.

A commercial snapshot

When it comes to office and industrial space, Wellington is almost full.

Office vacancy in the city is at 5.89 percent. Bayleys’ Wellington director of commercial and industrial Fraser Press says rents are holding steady though lease agreements are increasingly becoming tied to CPI, to help both tenants and landlords manage risk.

There are multiple significant new office builds under way in Wellington, such as Willis Bond’s Site 9 development at Kumutoto Wharf housing Bell Gully as its anchor tenant, and Newcrest’s new BNZ building on Whitmore Street, but Press say new capacity isn’t yet opening up vacancy rates.

“We’ve seen a lot of C-grade office buildings with low seismic ratings being strengthened and converted to residential,” he says. “Everyone predicted there would be a lot of vacancy coming online after that re-strengthening work, but that change of use has actually made the pool of office stock smaller.

“So we have an under-supply of office space, with a huge demand. Even with the impact of COVID, there’s been no slow down.”

“We have an under-supply of office space, with a huge demand. Even with the impact of COVID, there’s been no slow down.”

As in other main centres, Wellington businesses have come out of lockdowns still wanting an office presence even with more employees continuing to work from home. “The sweet spot, where the majority of deals are being done, is in the 500sqm-1,000sqm spaces, without any incentives,” says Press.

What is more unique to Wellington is the growing demand for space from the public sector.

“The Government is just growing and growing. That’s Wellington’s commercial backbone – the Government, and then the consultants and businesses that feed off the Government,” Press says.

Things only get tighter when looking at Wellington’s industrial property, with vacancies down to a record low of less than two percent.

The lack of developable land is the biggest constraint on industrial vacancies and new developments, says Press, which is keeping sustained upward pressure on industrial rents.

The sector of the industrial property market that has seen some new development is in smaller micro industrial units that are being largely filled - about 80 percent - with owner-occupiers, says Press.

In retail, like the rest of the country, Wellington’s bulk format stores are proving the most resilient to COVID disruption. Elsewhere, strip retail vacancies are likely to remain higher with ongoing uncertainty, says Press.

The other development pipeline breathing life into central Wellington is coming from Wellington City Council’s civic infrastructure programme. At the heart of that is Te Ngākau, the Civic Precinct, significantly impacted by earthquakes and the need for seismic strengthening or replacement which closed multiple buildings including the town hall, civic administration building and the central library.

The strengthening and refurbishment of the town hall is well under way. Nearby, Tākina, the Wellington Convention and Exhibition Centre is under construction and due to open in mid-2023 and, the heritage St James Theatre will reopen late in the first half of this year following earthquake strengthening.

The Council is making a record investment in water and waste infrastructure, including the construction of the giant Omāroro water reservoir in Prince of Wales Park in the Town Belt. Council is also due to make investment decisions on treatment of sewage sludge, landfill extension, and waste minimisation.

Wellington Mayor Andy Foster says the amount of development and construction makes it a very exciting time for the city.

“There is a huge amount of investment from both the public and private sector that's already underway or imminent. This will collectively result in a more resilient city capable of accommodating projected growth. If having cranes around the city is a symbol of good health, then Wellington is doing really well.”

Getting Wellington moving

When it comes to Wellington infrastructure improvements, transport is the hot potato. WCC, GWRC and Waka Kotahi NZ transport agency, have kept it central to their strategic plans with the creation of Let’s Get Wellington Moving (LGWM). Its role is to envision and develop transport systems for the city that support growth, make it easier for residents to safely move around while working toward meeting the country’s carbon targets, and to reflect locals’ aspirations for how the city looks and functions. Its focus is on creating solutions based around pedestrians, cycleways and mass transit as well as cars.

LGWM acting programme director David Dunlop says the group represents a once-in-a-generation chance to shape Wellington’s future, aligning transport with urban development, and moving more people with fewer vehicles.

“Moving more people with fewer vehicles will help meet our zero carbon goals and create a better connected, more vibrant, and resilient city and region,” Dunlop says.

“More people will be able to live centrally, close to jobs and education. Getting around will be safer, easier, and healthier, without relying on cars. You’ll have higher-quality and more reliable public transport, walking and cycling options. There’ll be better connections between the region, and the hospital and airport, and between the central city and the suburbs.”

Key progress on the agenda for LGWM in 2022 includes reviewing public feedback on mass transit options that would enable more people to travel into the city via light rail or rapid transit buses from southern and eastern bays suburbs, and on the congestion hotspot of the Basin Reserve and an additional Mt Victoria Tunnel.

Waka Kotahi regional maintenance and operations manager Mark Owen says the impact of mass transit goes beyond simply moving people efficiently.

“Alongside the Wellington City Council district plan and urban development changes, mass rapid transit can help transform the city and enable up to 21,000 extra houses by 2050. That will mean more jobs, more businesses, and a more vibrant city,” he says.

“Mass rapid transit can help transform the city and enable up to 21,000 extra houses by 2050. That will mean more jobs, more businesses, and a more vibrant city.”

Pedestrian improvements at key intersections and safe crossings over State Highway 1, are planned along with further community engagement on Thorndon Quay and Hutt Road improvements.

There are also plans to improve the Golden Mile and reduce traffic - from the north end of Lambton Quay along Manners and Willis streets to Courtney Place - making it safer and more accessible to pedestrians and cyclists.

Connectivity is key

The other key transport connections for Wellington are those that link the CBD with its outer suburbs and satellite regions, and links those areas with Wellington’s port, hospital and airport.

A vital part of that is Transmission Gully, the $1.25 billion, 27-kilometre stretch of new motorway running from Paekakariki and Porirua. It is one stage of the 100-kilometre northern corridor project which will eventually stretch through to north of Levin. The Peka Peka to Otaki corridor section is under construction and the Otaki to north of Levin section is in the design phase with construction due to begin in 2025.

Mark Owen says Transmission Gully and the Northern Corridor will be a transformative piece of infrastructure for Wellington.

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