Statistics NZ paying 'astronomical' rent for post-earthquake offices

A meeting room in space occupied by Statistics New Zealand in Westpac House. The lease is costing the government ...
ROBERT KITCHIN/FAIRFAX NZ

A meeting room in space occupied by Statistics New Zealand in Westpac House. The lease is costing the government department, left homeless by the November earthquake, close to $800 per square metre.

Statistics New Zealand may have taken the most expensive government lease in the country, as it raced to secure office space after the November earthquake.

Documents show the government department is paying close to $800 per square metre for a two-year lease across four floors in Westpac House on Lambton Quay.

The building is owned by Michael and John Chow, the rich-list brothers whose interests span from commercial property to brothels.

John Chow, who jointly owns Westpac House with his brother Michael, denies the lease was over the top, as Statistics New ...
PETER MEECHAM/FAIRFAX NZ

John Chow, who jointly owns Westpac House with his brother Michael, denies the lease was over the top, as Statistics New Zealand had taken all of its managed offices.

The price is more than double what some other tennants are paying for office space in the 1974 tower, and is well above the roughly $500sqm which lease experts said corporate tenants pay for leases in the best Wellington office towers.

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Both Statistics NZ and the Chow brothers argue the price is inflated because the lease is short term and much of the space is serviced offices.

Statistics New Zealand was left homeless after its headquarters, Statistics House, partially collapsed in the November ...
KEVIN STENT/STUFF

Statistics New Zealand was left homeless after its headquarters, Statistics House, partially collapsed in the November earthquake.

But a spending watchdog says serviced offices are aimed at small businesses willing to pay a premium for leases as short as a few weeks, not large government departments.

Jordan Williams, executive director of the Taxpayers Union said the cost of the lease was "astronomical" and Statistics NZ appeared to have been "out negotiated" by the Chow brothers.

In the days following the November earthquake, Statistics NZ was among a group of companies forced to find new offices, after its headquarters partially collapsed.

The department, which provides official estimates of hundreds of measures, was under pressure to resume its publishing schedule, which was briefly suspended.

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As well as taking part of HP Tower in Gilmer Terrace, Statistics NZ leased space in the almost adjacent Westpac House.

While terms of leases are usually confidential, detailed information was continued in documents released to potential buyers when the Chows announced plans to sell Westpac House this month.

A tenancy schedule showed Statistics NZ signed up for 2338.79sqm, at an average rate of $793.95sqm.

Two of the floors were leased to Statistics NZ for about $450sqm, which leasing experts said was not unusual for short term leases of comparable office space.

The remaining two floors were leased to the department for $930sqm and $1280sqm. A tour of one of the floors revealed a large number of meeting rooms, in a building with limited natural light.

Statistics NZ said the cost of the lease was at the "higher end" of the 15 buildings it viewed.

"However, having our agency in two buildings next to each other reduced other potential costs and enabled the organisation to continue to operate effectively in a very short timeframe."

The Chows had presented Statistics NZ with an "all or nothing" deal.

"The Chows offered us a package deal of all the floors we took, we could not pick and choose which parts we wanted given the market at the time. The deal on the table was all or nothing," a spokesman said.

John Chow dismissed comparisons to other leases in the building, because Statistics NZ had taken the entire serviced office space.

Williams said the Taxpayers Union believed the lease may be the most expensive of any government organisation in New Zealand

"We know of nothing even in this range. We understand it's more than Auckland Council pays for A-grade buildings on the Auckland waterfront," Williams said.

"Stats NZ has clearly been out negotiated. We can't see any justification for paying that much."

Jim Pinson of Colliers International, declined to comment on the specific transaction involving Statistics NZ, but said in general, while incentives to lure tenants disappeared, few landlords attempts to exploit the sudden demand for space after the earthquake.

"We anticipated that there might be some rises in rents, but we didn't see any price gouging," Pinson said.

 - Stuff

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