Working from home is not going to spell the end of the central city office building, according to the head of a leading property developer.
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Precinct Properties posted a sharply reduced full year profit of $35.1 million, down more than 80 percent on the year before, as falling property valuations dented its bottom line.
The result reflected a $66m fall in the value of its portfolio, compared with the previous year's gain of $166m.
The company has major office and retail properties including the recently completed Commercial Bay in Auckland and the Bowen Campus near Parliament in Wellington, and chief executive Scott Pritchard said few tenants had moved to reduce their occupancy.
"The role of the office remains as important as ever and we do not see a material change in office occupiers in New Zealand ... the vast majority of our occupiers have recognised that the office space remains critical to the success of their business and is a key factor in keeping talent and attracting talent," he told a briefing.
Pritchard said the working from home phenomenon would increase demand for flexible working space, but central city foot traffic and public transport usage showed central city space was here to stay.
He said the broader construction market was expected to soften with building costs possibly falling as much as 10 percent.
Precinct is building office and retail space in Auckland's Wynyard quarter, close to the waterfront, and an office block in the Bowen Campus complex.
It has delayed the $300m One Queen Street project in Auckland, which will convert the HSBC building by the waterfront into a mixed retail and commercial building with a five-star Intercontinental Hotel.
The company said it had given rent abatements to tenants worth $1.7m and deferrals worth another $1.3m in response to the pandemic.