BP is the latest to join the corporate drift north after deciding to relocate its head office from Wellington to Auckland. But does the imposing size of Auckland make it a better proposition for corporations or do the charm and compactness of Wellington give it an edge. Dave Burgess investigates.
Oil giant BP's decision to close its Wellington head office of 40 years and relocate to new premises in the City of Sails is just the latest in a long list of moves north by corporates.
The catalyst for BP's decision was the damage its head office, BP House on Customhouse Quay, sustained in the first of two big earthquakes this year.
But BP said its decision was ultimately based on long-term strategic reasons such as being close to supply chains, its refinery, and a big chunk of its customer base.
Colliers International executive director Jim Pinson says that at times - and he was not specifically discussing BP - it can be misleading when businesses say they need to be close to their market.
"What is their market? They perhaps have more people in business who they supply up there but most people's market is across New Zealand.
"You can't afford to operate in Auckland alone."
Pinson said Wellington's top-level corporate properties were in the central city.
That is not necessarily the case in Auckland.
"Not everybody who moves to Auckland moves to its central business district. You have a number of sub-markets - Manukau, North Shore, Takapuna, Penrose, Newmarket.
"I think the CBD in Auckland is still fractionally more expensive than our CBD so it's not necessarily cheaper in office terms . . . but there are more options."
However, Pinson says human resources and information technology are bigger costs in relocating and that had played a part in Wellington retaining businesses.
"We've had quite a few businesses decide it's OK to stay in Wellington because they don't want to be faced with huge costs.
"It's a bit like plane crashes. You only hear about the ones that crash, not about the 10,000 that land safely."
And although some big corporations, such as BNZ and ANZ, had moved key head office functions to Auckland, collectively they still had thousands of workers in Wellington.
"It is not all bad news."
Wellington Employers' Chamber of Commerce chief executive Raewyn Bleakley says the capital's future success will not come from competing with the country's biggest city.
"It'll come from the city leaders - in business . . . education . . . and social areas, and those elected to represent us all - working together to drive economic growth.
"New Zealand will grow if both cities, and the rest of the country for that matter, are in growth mode."
Bleakley says we should be careful not to get distracted trying to compete in areas where we do not have a unique advantage.
"Both cities need to maximise their strengths. That's how New Zealand will get ahead and everyone can enjoy in the success."
One area of success is Wellington's CBD, which is proving to be an extremely competitive place to invest in commercial property.
"CBRE Research this year revealed that Wellington is ranked No 1 on a list of 17 cities around the world as measured by prime office yield.
"Wellington's 7.9 per cent was easily better than Auckland's at 7 per cent."
Other cities Wellington beat included Melbourne, New York, Sydney, London (CBD), Singapore and Hong Kong, Bleakley says.
She also says that Wellington has the most highly educated workforce in the country, according to the latest census, which is a bonus for employers.
"We are a smart capital. The median income in the capital region is $32,700, the highest of all regions in New Zealand, an increase of 16.8 per cent since 2006."
On the other side of the coin, Auckland Chamber of Commerce chief executive Michael Barnett says Auckland's population is increasing at twice the rate of the rest of the country's growth.
"Auckland's biggest problem is its attractiveness. It is where people want to be.
"Wellington used to be an important place for corporates to be located. This was in the old economy days when corporates needed to be close to Wellington politicians and officials to lobby and advocate."
He says in a largely deregulated economy the need to locate in Wellington has disappeared.
It had been "replaced by a need to stay close to and participate in the international market competition for ideas and doing the business in a global market on a global scale".
"If a corporate is not in Auckland it is missing out."
Barnett says Auckland handles about 46 per cent of imports and exports.
It is easy to overlook the human cost of a company's decision to relocate to Auckland. Often workers must decide whether to move or face redundancy.
Auckland-born Terry Swain had to face just that dilemma when Chevron (the Caltex people) moved its head office from Wellington to Auckland in 2008.
About 100 staff could have moved. Swain says he was one of about 18 who took up the offer.
He was promoted, got a company car and free fuel.
All staff who moved received something like a 5 per cent salary increase to cover the higher cost of living in Auckland.
There was also an allowance of about $30,000 over three years to make up for the more expensive Auckland houses.
In the first six weeks after the move Chevron paid for Swain, his wife and primary school-aged kids to live in a CBD apartment.
The entire cost of the move was met by Chevron. "Financially it was worth going," Swain says.
But things weren't so rosy on the school front.
"We thought it would be a good time to move the girls to socialise them, to get new friends.
"We didn't think the impact would be that great upon them . . . but it was. The girls didn't make friends so readily as they did in Wellington."
Swain ended up living in Titirangi, while Chevron's office was in Penrose. The daily commute was "diabolical".
"At peak hour and in a thunderstorm it could be 1.5 hours to 2 hours, or you went home again because you weren't going to go anywhere. I would work from home till 9 in the morning then drive in."
Swain says Auckland's climate is better, and there are more things to do, but he personally prefers Wellington. "It is smaller and I do like that."
He was made redundant by Chevron and returned to Wellington in December 2010. He had a simple answer when asked if he would ever again relocate to Auckland. "No".
Bleakley says Wellington has some fantastic features to tempt workers to stay, including vibrancy and ease of getting around.
But Barnett says Auckland consistently ranks in the top-10 world cities to live and work in, well ahead of Wellington.
"It [Auckland] is a city with lots of energy, activity, innovation - both a liveable and lively city - coupled with a peerless environmental harbour setting."
He admits Auckland has some infrastructure issues - think road congestion and public transport - but says they are being worked on.
Property developer Ian Cassels is a passionate Wellingtonian. He is in no doubt that the capital provides a superior location for businesses and workers.
"People in Auckland are living in overpriced houses on overcrowded motorways, living really a very marginal life, in my opinion.
"It's fuelled by a mad-crazy government which feeds them on steroids and produces an outrageous result for the country.
"We [Wellington] have got the basics right but the current government and the powers that be don't see it that way."
AUCKLAND V WELLINGTON
5 Reasons for Auckland
- It is our only city of a global scale. It commands 36 per cent of New Zealand's GDP ($70b in 2011 according to Infometrics), and 34 per cent of our population (1.5 million at June 2011 according to Statistics NZ).
- It is where New Zealand's corporate business is done.
- Where corporates exchange ideas and compete. Most are located in the central city and within easy reach of each other; it is a dymanic environment and a multi-layered 24/7 ctiy for learning, living and working.
- Its international airport means Kiwi international corporates are within a one-stop trip to counterpart commercial cities in Asia, America and Australia.
- Quality of life. Auckland consistently ranks in the top-10 of world class cities to live and work (well ahead of Wellington).
Source: Auckland Chamber Of Commerce.
5 Reasons for Wellington
- Ease of getting around the city. This is essential to the economic wellbing of any city. You can fit in more meetings and do more business in a compact city.
- Proximity to the airport and seaport. The airport is just 8km from the the CBD, a 15-10 minute drive. A bonus for business people, tourists and companies, which import by air.
- The richest and most hightly educated workforce in the country (according to the 2013 Census). Our education institutions are world class and we're innovative.
- Vibrant and fun. Workers like to be here.
- Safe, quality of lifestyle. Almost all residents live within 3km of the coast, close to beaches, water activities, fishing, and the waterfront is minutes from the CBD. Crime is low and declining.
Source: Wellington Employers' Chamber of Commerce.
- © Fairfax NZ News
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