Public service may leave city

The Government is looking at shifting chunks of the public service out of the heart of Wellington to save money on office accommodation costs.

Officials are about to evaluate the cost and benefit of moving sections of departments that do not need to be housed near Parliament or the CBD to cheaper accommodation in Porirua and the Hutt Valley.

The work is being done by the Government's property management centre of expertise (PMCoE), which was set up two years ago to co-ordinate all government accommodation requirements.

The possible relocation of "non-centre facing functions" to cheaper locations is mentioned in Cabinet committee papers released by State Services Minister Jonathan Coleman.

The option of leasing out-of-town offices was mentioned last year when developers were invited to put up proposals for new head office space for the ministries of Social Development, Health, Education, Business Innovation and Employment and the Crown Law Office.

The Cabinet papers, released under the Official Information Act, say a small number of the 25 responses offered non-CBD locations but none met the criteria.

"However . . . a further process will be undertaken by the PMCoE in 2013 that will investigate non-CBD options for non-centre facing functions."

The papers indicate the Government expects to save $339 million on Wellington office accommodation costs for the five departments over the next 20 years.

The departments now lease 124,447 square metres or more than 12ha of Wellington office space and the plan is to slash this to 87,622sqm, a 30 per cent cut.

The biggest savings will be made by squeezing staff into less space - the new benchmark is 13sqm per work station.

Extra savings are expected from a newly established system of co-ordinating government property management through the PMCoE.

The old system, where agencies were responsible for securing their own space, saw departments competing for a limited pool of suitable office space.

The papers say one of the key outcomes of its new procurement system will result in a "changing market dynamic".

"The Crown is able to leverage its economies of scale in the procurement of property-related goods and services while also creating an oversupply of office accommodation in the market through a significant reduction in its footprint."

Property Council president Ian Cassels was concerned at the impact of the Government's drive to cut accommodation costs on a struggling Wellington economy.

"You can't really complain about people doing their job well. You have to accept that but as a consequence Wellington is struggling to make any headway against Christchurch and Auckland in terms of government attention. It would be good if they could think about more jobs in Wellington because it makes such a critical difference.

Office rents in Lower Hutt are typically around $200 per square metre - about half the rate for similar space in Wellington.

But Cassels said accommodation costs were a very small part of the cost of doing business. For government departments it would be just a fraction of their staff costs and it could be false economy to move people out of the city just to save on rent.

"Last time they did that they discovered people didn't want to work out there."

"Wellington boasts incredibly good staff retention rates whilst outer locations find it hard to attract and retain staff.

"People who work in the city enjoy it" and retailers and everybody benefited.

Wellington's CBD was already suffering a high office vacancy rate accentuated by the loss of office workers to the Centreport development and city retailing was not pumping, Cassels said.

Colliers International agent Charles Peterson said the Hutt Valley and Porirua would certainly benefit from government department relocations.

A number of agencies including Social Development, ACC, Inland Revenue and Defence already had big offices in Lower Hutt, Upper Hutt and Porirua.

"It would be great to have another 1000 people in Lower Hutt but there isn't a lot of suitable vacant office space available."

Departments wanted large floor plates in high-seismic-standard buildings.

Peterson said he knew of proposals to upgrade buildings that would be suitable but it was "chicken and egg". Landlords would only spend the money if they knew they could secure the leases to justify it, he said.

The Dominion Post