ORC's $54m Whare Rūnaka a 'significant asset' for whole region

Work to turn the former Warehouse store on Maclaggan Street into the Otago Regional Council’s new multimillion-dollar home is expected to be completed by the final quarter of next year, Port Otago chief executive Kevin Winders says.

The now $54 million project was given the go-ahead at the start of 2023, after ORC voted to accept Port Otago’s offer to move to construction of the Whare Rūnaka (council house) project, following years of false starts and failed attempt to find a new central location for the regional council.

Port Otago, through its property arm, acquired the building in 2021 to re-purpose it as the new home for ORC'S more than 300 staff, who are currently spread across multiple sites in the city in three different, temporary, offices.

Port Otago is wholly-owned by ORC.

Speaking to Crux today, Port Otago chief executive Kevin Winders said port’s property company bought it on the open market from the property syndicate that owned the site.

“We had been talking to the council regarding our property estates in town and clearly we're in the commercial property game, so we we were looking for opportunities for a good site for them and this one came along and we discussed it with the council and we proceeded to acquire it.”

Mr Winders said the 40-year lease arrange with the council to use the building came later, but was similar to the way the property company operated across its national property portfolio.

“So, we followed the same process with our shareholder.”

The original cost of the build, was to have been $38 in 2021 but due to rising construction and inflation costs now sits at $54m.

The original cost estimate was now “not today’s world”, Mr Winders said.

There was also an added cost and delay due to the need to use more steel for foundations than anticipated, after a soft patch of ground.

“After that, we've had a pretty good run. We have skylights going in today into the roof and the building should be water type at Christmas. So, just a typical build for us.”

As part of the development Port Otago acquired the Birch St/Kitchener St site for $7.9m to help fund the $11.2m ORC fit-out of the new build to meet ORC specifications. The balance of that funding will come from the building reserve, which has been built up for that purpose.

The cost to the ORC of leasing the new premises has risen by $339,000 from the original cost in 2021 to $2.59m per year.

While Port Otago pays for the core building redevelopment, ORC pays tenant-specific fit-out costs; which are later depreciated as leasehold improvements.

Council chief executive Richard Saunders today said the fit-out date and date for staff to move into the premises were still to be confirmed.

“We are looking forward to relocating our Dunedin staff to the new building in the future and in the meantime are continuing to focus on delivering a great service for our community. We’re very comfortable with the progress being made by Port Otago and thank all of the people involved with the construction project.”

Mr Saunders said the building proposal was approved by ORC following many years of consideration about its future accommodation needs within Dunedin.

“In making that decision the council considered a number of factors including value for money. The building will be a significant asset for Port Otago which is owned by ORC on behalf of the whole region. The development will also bring significant investment to this part of the City.”

He confirmed the completion of the Dunedin offices would have no bearing on the council’s presence in Queenstown or Wanaka.

“Current service levels will be maintained or improved at all existing sites including Queenstown and Wanaka.”

Timeline of ORC’s search for a new home:

1995 – Refurbished Stafford Street top floor added
2006 – ORC reviewed head office requirements and site locations
2007/08 – Acquired Birch/Kitchener Street site (from Port Otago)
2008/09 – Progressed Birch/Kitchener Street design
2010 – Birch/Kitchener Street development discontinued at contract award stage
2011/12 – Reviewed head office requirements and options
2012/13 – Refurbished Stafford Street reception/egress and constructed Council Chamber annex
2015 – ORC Reviewed requirements / spatial needs and use of existing site
2015/16 – Investigated site options, new preferred site identified
2016/17 – Dowling Street acquisition and due diligence progressed – discontinued at concept design stage (site acquisition not achieved)
2018 – Leased level 2 Philip Laing House and relocated Council Chamber
2018/19 – Anzac Ave acquisition and due diligence progressed – discontinued at concept design stage (site acquisition not achieved)
2021 – Leased level 6 Philip Laing House
2021 – Whare Rūnaka – Port Otago acquired site July 2021 and agreement entered into for ORC to lease redeveloped site
2021/22 – Progressed Whare Rūnaka design
2023 – Design approved, building to commence 2023.