A planned science and technology precinct for Port Nelson has been abandoned. Photo: RNZ / Tracy Neal
A science and technology precinct planned for Port Nelson will no longer go ahead, after supply chain issues and inflationary pressure saw the project cost almost double to $45 million.
The vision for the precinct was to create three office buildings housing around 1000 Port Nelson staff and new laboratories that would eventually house all of Cawthron's scientists.
Cawthron Institute chief executive Volker Kuntzsch said the decision not to build at the site, near State Highway 6, was a sad one but was based purely on financial viability.
"Everybody knows that cost of living increases are leading us to tighten our purse strings these days and the same has happened in our case where we just felt that for a laboratory of the size that we wanted to build down by the port, which is a very complex undertaking, requiring a lot of technical specialities, the cost was just extraordinarily increasing."
The costs of the project have gone from $25 million less than two years ago, to around $45 million today.
"Supply chain increases, the inflation that has hit the building sector, and [the cost of] the technical equipment that is needed for laboratory of that standard has just grown immensely."
Kuntzsch said it had worked with Port Nelson on various iterations of the project in order to try and reduce costs.
"But we ended up with a situation where we would have watered down our ambition to really come forward with a very sustainable and attractive building, that we felt it was defeating the purpose."
The vision for the proposed precinct, bordered by Vickerman Street, Wildman Ave, Haven Road and State Highway 6 at the southern end of Port Nelson, was to create a hub of innovation and creativity by bringing together companies working in the science and technology sectors.
The Cawthron Institute has been located in Halifax Street East in The Wood since the mid-1960s and Kuntzsch said the plan was to eventually move all staff into the new precinct.
The one-hectare site in The Wood was put on the market in mid-2022 to raise additional capital but Kuntzsch said the offer they received was several million dollars lower than expected, which was another spanner in the works.
The organisation is now taking another look at options for developing the Halifax Street site to include new laboratories without disruption to its 280-odd staff.
"It does offer a great opportunity for development into the future and we are now soon going to embark on developing a master plan of what that might look like.
"We've also come to the conclusion that it shouldn't be about a precinct per se, but that the region should serve as the hub for a blue economy cluster we want to build here with over 400 marine-related entities in our region."
Mayor Nick Smith said he was not surprised the project had been called off given the sharp increase in interest rates and construction costs.
"The more than doubling of interest rates has had a massive impact on the commercial viability of a development estimated to cost $135 million between the two organisations."
The council allocated a $1.5m capital grant to Cawthron and a $1.2m capital grant to Port Nelson in its long term plan 2021-2031 to support the Science and Technology Precinct, but both were conditional on the project proceeding.
To further assist the development, stormwater pipes from under the site had been relocated and upgraded at a cost of $3.4m to provide a clean site for development.
Smith said there was a conversation to be had with Port Nelson about this work and how it had benefited Port-owned land.
He said the importance of both Port Nelson and Cawthron could not be overstated and their continued collaboration was key for Nelson's economic growth.
Cawthron was New Zealand's largest independent institute and critical to Nelson's status as New Zealand's seafood capital and to the development of the blue economy.
Port Nelson CEO Hugh Morrison said it was extremely disappointing the precinct would not be going ahead.
"The Port and Cawthron were fully committed to realising the vision of the precinct and together we embarked on a robust due diligence process to progress the development for the science and technology sector."
The port would consider other development options for the site that would contribute to economic growth in the region.