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Published: 2012-02-24 00:00:00

Waikato Regional Council has decided to lease, rather than own, new office space which will save a further $1 million over and above the savings and efficiencies expected to be gained through moving into a new building.

The council is likely to seek expressions of interest from developers interested in building a purpose-built building on Hamilton East land owned by the council.

Councillors had initially indicated a preference for owning the building, however, new financial and property advice had tipped their decision in favour of leasing.

“Although the annual financial costs of ownership or leasing are broadly similar, over 10 years, the rate impact of leasing is $986,000 less than if we opted to build and own,” chairman Peter Buckley said.

“In the end, the factors which we considered in making this decision were both strategic and financially prudent.”

Key factors were:

  • There is no compelling need for the council to own the building which will be a general purpose office building on a site that is not particularly important strategically.
  • The council can have significant involvement in the design process to ensure a building of suitable quality is developed.
  • Owning the building would result in either the investment fund being overly weighted with property assets or, alternatively, the council having to incur $25 million debt.

The regional council’s current office accommodation in Hamilton is inefficient, with the organisation working out of five buildings at three different sites in Hamilton East, as well as in Marlborough House in the city centre.

The current arrangements affect productivity, with staff commuting between sites. In addition, it is both time consuming and costly to reconfigure existing spaces and organise the leasing of additional premises.

The council sought the assistance of a property advisory firm to investigate various options to address its accommodation issues. As a result, in February 2009 the council purchased 319 Grey Street, Hamilton East, as a site for future development of a new, best practice office premises.

Construction on the council-owned land in Grey St could start in September 2015 following the expiry of the lease of the tavern premises on the site and the completion of required planning, design and contractual work.

Costs will be offset by the sale of the council’s current office building in Hamilton East.