Xero’s growth leaves capital space for lease
Three floors will become vacant when Xero moves out of 3 Market Lane, Te Aro.
Xero’s rapid expansion has resulted in its Wellington premises in the CBD being placed on the market for sub-lease while the company plans its relocation next year to new, larger flagship premises across the road in the redeveloped former Manthel Motors building.
Next year the NZX listed company will be moving over 450 Wellington staff currently located in three buildings in the CBD into 6500sq m of space in a new five-level office building on the corner of Taranaki St and Wakefield St.
The property is being developed by The Wellington Company within the heritage-listed facade of the 1920s’ constructed Manthel building.
Luke Frecklington and Luke Kershaw of Bayleys Capital Commercial have been appointed sole agents to sub-lease three floors of office space Xero currently occupies in Xero House at 3 Market Lane, Te Aro.
Available for occupation in September next year after Xero has moved out are about 637sq m on Level One, 1005sq m on Level 2 and 317sq m on a mezzanine level.
Frecklington says strong interest is expected in the premises which are being marketed for lease well ahead of the availability date to give a new tenant plenty of time to plan a relocation.
“This is contiguous space connected by internal stairways as well as by a lift. There will be just under four years to run on the existing lease when the space becomes available but importantly there is also the flexibility of a six-year right of renewal from April 2021. Alternatively, if the preference is for a longer initial lease term, there is potential for this to be negotiated with the landlord.”
Xero entered into a nine-year lease in April 2012 over 1960sq m of space in the former Rialto Cinema building which was redeveloped into character office accommodation by Willis Bond & Co.
The property was subsequently sold to Wellington property investor Charlie Zheng, who owns a substantial portfolio of Wellington CBD properties, and whose company Cornerstone Partners Ltd manages the building.
Nathan McLean, Xero’s global facilities manager, says when the company commenced the lease four years ago it had less than 150 staff in Wellington. “At the time, we thought the building would serve us well for many years to come and cater for future growth – but we have grown rapidly to support the company’s global expansion.
“For a highly collaborative company like Xero, where the sharing of ideas and communication is a big part of our culture, it’s important to have as many of our people in one building as possible. That’s the main reason why we’ve decided to sub-lease the Market Lane space and consolidate all our people into another character building that will be capable of accommodating future growth.”
Frecklington says naming rights could also be available under the sub-lease or a lease assignment arrangement - which is a strong drawcard given the landmark building’s very high profile corner position with exposure to high volumes of traffic travelling into and out of the CBD along Wakefield St and Cable St.
“The building is in a sought after location, being close to the waterfront and Te Papa, and is part of a $100 million Market Lane development undertaken by Willis Bond & Co which also includes an adjoining 11-storey mixed use building at 1 Market Lane.”
Other occupants at 3 Market Lane are Trade Me, which also leases three floors at 1
Market Lane; and Infratil and Morrison & Co Infrastructure Management Ltd.
McLean says one of the key attractions of the premises for Xero was the high standard of refurbishment undertaken by Willis Bond & Co and its head contractor LT McGuiness which brought the building’s seismic rating up to 100 per cent of New Building Standard (NBS).
“It also incorporated modern, energy efficient building services such as chilled beam air conditioning and new lighting, while retaining the essential character of the building.
“It’s a unique shaped building with great high stud space and beautiful big windows which, in combination with the corner position, provide loads of natural light. It’s a building with personality that offers an excellent working environment for our people and has enabled us to put our own stamp on the premises.”
Kershaw says the extensive, high quality fit out that was undertaken for Xero by Studio Pacific Design will also be available to the next occupant. “It’s a very functional, cost-effective fitout that has made very efficient use of the space available. It is mostly open plan, but with some really good break-out meeting areas, and it could easily be adapted to suit the requirements of a wide range of tenants.”
McLean says Xero staff formerly located in the Manthel building have temporarily relocated to the Spark Central complex which is owned by The Wellington Company while other employees are in another building at 181 Wakefield Street.
The $35 million redevelopment of the 1920s’ Manthel Motor’s building will retain and refurbish the existing two-level building’s facade which will be incorporated into a new five-level steel-framed office building that will be leased to Xero for 12 years.
In a first for Wellington, the floors above the existing building will be sheathed by a semi-transparent outer skin fabric called Stamisol, says Neville Parker, building designer with Inside Design.
“We’ve designed a screen of semi-transparent mesh that covers most of the upper building. This material creates a layer that is opaque from the outside in bright sunlight and becomes almost transparent at night. It’s a giant sunscreen which will mirror the bulk and form of the Manthel Building with a simplified reflection above.”
Parker says the fabric will soften and simplify the exterior of the building and reduce solar heat gain, improving energy efficiency.