Anzo tackles vacancies and over renting

Friday 6th July 2001

ANZ Centre

By Campbell McIlroy

Loss of tenants to Australia and over renting of between 20-24% have left AMP NZ Office Trust executive manager Rob Lang unfazed.

Both Nufarm and Merrill Lynch surrendered their leases in Anzo's ANZ Centre on Auckland's Albert St when they moved their local operations to Australia.

The resulting vacancies have been filled by shuffling tenants in a game of musical chairs.

Methanex has moved from occupying half of level 19 to take all of level 38, Nufarm's old space, and P&O has moved from level 10 in Anzo's Quay Tower to take level 39 in ANZ, previously occupied by Merrill Lynch.

Other shuffling in the ANZ Tower has seen NZ Funds Management, which occupied levels 10 and 18, now occupy contiguous floors on levels 18 and 19.

Tradenz has expanded into the space left vacant by NZ Funds Management, adding level 10 to the two floors it already occupies on levels 11 and 12.

The net result for Anzo has been a slight increase in rental income with the rents for the top two floors increasing from $287.50 and $295 a sq m respectively to just over $300 a sq m.

But the company is still over-renting between 20-24% of its office portfolio.

Mr Lang said Anzo would approach the over-renting on a case-by-case basis but had already had some success in renegotiating a few leases as outlined in last year's annual report.

The biggest over-renting remains in 1 The Terrace and 125 The Terrace in Wellington and NZI House on Queen St in Auckland.

He said that from the valuation perspective over-renting was becoming less of an issue than it was two years ago.

But he said that very much depended on the level of over- renting and the outlook for the asset.

Meanwhile, Mr Lang dismissed any suggestion the new PWC Tower would have any negative impact on Quay Tower, which is right behind the new building.

In fact, he said, all rent reviews over the last 12 months had exceeded valuation forecasts.

"Quay Tower has always been priced on the basis that there was a development site in front of it. We will see that come through in the valuations this year and I don't think it will come down at all."

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