Construction sources say new QLDC council offices should cost over 60% less

The Queenstown Lakes District Council plans to spend $51 million on its new 3,500 square metre CBD office building. However, expert sources say that the construction cost, at $14,571 per square metre, is considerably more expensive than any high standard commercial office building budget.

One of the top authorities in New Zealand on commercial building costs is QV. QV purchased the well-known Rawlinsons New Zealand Construction Handbook in 2014 and it is now rebranded by QV as CostBuilder.

QV’s CostBuilder does not have specific Queenstown commercial building costs, so we’ve accessed data from Christchurch and Dunedin and used the absolute top of their cost ranges.

The most expensive South Island construction price per square metre (as a “lettable shell”) is $3,900 per square metre in central Christchurch and then the most expensive fit-out cost (that QLDC says is included in their $51 million budget) is $1,425 per square metre. That produces a total of $5,325 per square metre.

Using the same CostBuilder source, a Dunedin office building of 3,500 square metres across two to five storeys with lifts would have a middle cost estimate of $2,350 per square metre to build and $800 per square metre to fit out, so a total of $4,300.

Crux then cross checked with an expert Queenstown construction source who says that a basic “glass box” office building should cost in a range of $4,500 a square metre to $5,000 a square metre.

Other experts who specialise in high end office buildings agree that $7,000 a square metre would be a healthy and practical budget for something in the “prestige” main urban centre bracket. The same experts did confirm that $14,000 a square metre would not be unheard of for a top end city centre “statement” building that would include things like an atrium lobby and other expensive features not linked to productive office space.

Crux has asked the QLDC to justify the very high construction cost and also has asked (and already been refused) access to a 2014 KPMG report to the QLDC that advised the council that to design and build their own offices would be the best, most cost effective solution.

Instead, the council is proposing an extremely complex Ngāi Tahu partnership/land swap agreement, which many residents are having considerable trouble understanding and the council agrees involves a risk element.

In telling Crux we could not see the 2014 KPMG report the QLDC communications and PR team said it was “commercially sensitive”.

Based on rent paid by the Christchurch City Council, QLDC could be paying as much as $1.75 million a year in rent to Ngāi Tahu Property (NTP) for the new Queenstown office building, but under a complex CCO plan the council could get half that money back from NTP. NTP is offering to make a $20 million contribution to the QLDC office build costs, but its not clear what exactly they get back in return.