 
 Dominion Post, Thursday 13th September 2007
WELLINGTON 'HAS SLIPPED OFF THE COMMERCIAL PROPERTY MAP'
Wellington has slipped off the map when it comes to commercial
rents, according to developer Ian Cassels.
He told the Regional Chamber of Commerce, in a wide-ranging address,
that a city's success could be measured by what businesses would
pay to be there.
“Our top rents are $500 to $600 (s square meter a year). In Sydney that's not good enough to get a B-Grade space.” Nonetheless, the city was “streets ahead” of Sydney, Melbourne or Auckland in terms of sustainability. Its compactness and public transport made the capital much greener than its counterparts. But it could do more in terms of generating electricity locally, especially from wind. It also needed energy-efficient transport solutions, such as the driverless ultrapod units being planned for London's Heathrow Airport. Mr. Cassels said the Resource Management Act needed major changes. “Most of the time it's a nightmare.” He said many good developments never happened because owners were “burnt off” by the thought of the act's bureaucracy and potential for delay. Wellington's commercial property market had flourished since he started as a developer in 1990, but still had a way to go before it reached the dizzy heights of the 1980's, he said. In 1990 there was no office construction and no inner-city apartments. “The city was dangerous at night. People left the city at 5pm.” Mr. Cassels developed 250 apartments in Cuba Street. But selling them was a hard slog. “People who bought apartments thought they should be quite cheap.” “You were selling people their biggest asset, so they got quite upset if there was a scratch on the wall. That made selling a hard task.” There was still a long way to go before owners were getting the sort of returns they were achieving in pre-crash days. The Majestic Centre - Wellington's tallest office building - cost $120 million to build in the late 1980's. If its value had appreciated by 5% a year, it would now be worth $360 million. But its latest government valuation was $90 million. If rents for Wellington's 1.3million square meters of office space went up by an average of $100 a square meter, that would generate an extra $130 million a year for building owners to reinvest in the city. That was not an unreasonable proposition, he said. Wellington City Council's rating policies came in for special criticism. Mr. Cassels urged the council to make heritage buildings exempt from rates, thereby recognizing the private cost of retaining and maintaining them. “Heritage enhances the city's ability to trade. It gives the city its character. People love heritage.” The differential system that charged commercial buildings significantly more in rates than equivalent-valued residential properties had to go. “Commercial ratepayers should not be taxed at a different level because someone somewhere believes we can pay. The system in wrong, completely wrong.” Written by Colin Patterson
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