ASB expects its new Auckland headquarters and 'activity based working' style to drive productivity gains and reduce costs

By Gareth Vaughan

ASB management believes its new "cutting edge" headquarters at Auckland's Wynyard Quarter will both save money and improve productivity as staff adjust to work in a more collaborative, activity based working style.

The new HQ, into which 1,280 staff have moved over recent weeks, has been in the planning since May 2008. Derek Shortt, ASB's general manager of property, told interest.co.nz in a Double Shot interview it would take some time to bed in the new building, but ultimately ASB's new HQ should benefit staff, customers and shareholder Commonwealth Bank of Australia (CBA).

"One of the big drivers of this building against where we've come from is around the sustainability and reducing operating costs," Shortt said. "Where we were up in Albert Street, operating costs were about  $145-$149 a square metre. We're sitting here at about $95. We believe we'll get that down lower."

"And when you consider that running across the full term of the lease, it starts to add up. There are considerable savings."

ASB's lease at its old HQ expired on June 30 and it was facing a rent increase.

"We did a business case and looked at staying where we were. The (135 Albert Street) building and the fitout were 22 years old. Brookfield Multiplex  owned the building and they provided us their commercial terms. When we considered both (options) they were very comparable in terms of the commercial side of things," said Shortt.

The building that housed ASB's previous HQ has been bought by Auckland Council, from Multiplex, for $104 million. The new Wynyard Quarter HQ is owned by Kiwi Income Property Trust (KIPT), whose manager Kiwi Income Properties Limited is, like ASB, a subsidiary of CBA.

ASB has taken out an 18 year lease for about 18,000 square metres. Its old HQ was 33,000 square metres. KIPT will receive an initial net rental yield of 8.5% based on the forecast development cost of $134 million. KIPT says the building’s value is projected to be $153 million on completion. Building work is continuing on the ground floor, which will include an ASB branch alongside eateries, a convenience store and cafe.

The building was built by Fletcher Construction at a cost of $105 million. The architects were Sydney firm BVN. KIPT was responsible for funding and ASB took the risk of design on itself, Shortt said.

ASB's lease agreement provides for fixed annual rental increases of 2.5% throughout the term, with a mid-term market rent review subject to a 15% cap and collar arrangement.

'More productive'

"More people are coming in during August and September," Shortt said. "We can get up to about 1,650 working on activity based working because that allows you to put in 80 desks but get 100 people in because no one has got a fixed abode. Buildings like this enable companies to be more productive." 

"It means that they (ASB management) are not having to bring on more head count. They can make sure that productivity benefits flow out of it. If we had stayed where we were, I'm sure with the way we were siloed there would have been additional head count and costs occurred. So the shareholder would not have benefited from that."

"By coming into these sort of buildings I believe it's a win-win. Not only for the customer, because we can reduce cost, we're going to get more collaboration and more outputs from our people from being in these environments. So therefore it's a win-win across the corporate, the customer and the shareholder," Shortt said.

At the end of its last financial year ASB had 4,698 full time staff.

New bank head offices have been something of a theme in recent years with Westpac having moved into a new HQ at Auckland's Britomart Precinct two years ago, ANZ consolidating staff, including those from National Bank, at the ANZ Centre on Auckland's Albert Street, and BNZ setting up its national HQ at 80 Queen Street in 2009. 

No office for the boss

ASB's new seven level open planned building is touted as a campus style, village concept.

ASB CEO Barbara Chapman told interest.co.nz in February that she would be joining her staff in adopting "activity based working", a version of hot desking in the new HQ and have no office. Activity based working is said to cut costs and boost productivity. It has been gaining popularity among Australian corporates and is used in a couple of buildings, housing about 5,000 staff, by CBA.

The idea is that instead of having allocated seating and desktop computers, employees working under an activity based working model generally use mobile devices and sit in groups based on the activity or project they are currently working on. Shortt said the concept, which originated in Amsterdam, had been introduced to ASB by CBA chief financial officer David Craig.

"This building is quite a milestone for the bank because it's not only a new way of working, which is activity based working, we've moved to the digital phase," Shortt said.

"We've all got mobility devises (iPads and laptops), our IT people have put everything into the cloud so we're working off cloud (computing) based retrieval of data. It's also a cultural change for a number of us because working in a vertical tower you're isolated, you're siloed so you work in teams. Whereas here we work as a company, collectively across all divisions."

Shortt cited a "bump factor", which means that due to being in an open planned office, staff bump into each other and therefore don't have to send as many emails.

Shortt said the new HQ, which has Wi-Fi and is as big as a rugby field both in length and width, is divided into "neighbourhoods." The 48 people in his corporate property division, for example, have lockers where staff can store things overnight in their neighbourhood area.

"We as a team will go there in the morning and work from there. But it doesn't prevent us from going to alternative areas in the building. We've got plazas, we've got auditoriums, we've got boat houses and people can migrate across those depending on the activity. Of course we've got video conferencing in all of the meeting rooms," said Shortt.

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