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SPECIAL REPORT: SPOTLIGHT ON WELLINGTON 23The National Business Review / November 11, 2016
Jason Walls
Three things tend to spring to people’s mind when it comes to what makes our nation’s capital stand out for business – craft beer, good coffee and technical innovation.
This is bad news for the coun-try’s bureaucrats – who would no doubt think it remiss to leave them off the list – but will strike a welcome chord for anyone work-ing in Wellington’s tech sector.
Over the past 10 years, it has grown 25% in Wellington and now contributes $2.1 billion to Wellington’s regional economy, as well as generating 16,000 jobs.
Tech industry explodesIn fact, the number of ICT busi-nesses in the region is growing so quickly that Wellingtonians are more than three times as likely to work in ICT as people in other New Zealand cities.
It’s no wonder then that multinational companies such as Xero, TradeMe and Weta all began in Wellington.
In fact, open source software company Silverstrip chief execu-tive Sam Minee says he cannot think of another city in New
Zealand where he would want to start a tech company.
The Wellington Regional Economic Development Agen-cy (WREDA) has also highlighted the sector as the pride of Welling-ton, with chief executive Chris Whelan saying it is an increas-ingly important component of the city’s economy.
“Wellington is positioned to play a major role in lifting the value of New Zealand’s exports, through selling high-value, weightless tech products and services internationally,” he says.
“The influence of the sector extends into areas such as the IT departments of both corporate entities and the government. Its contribution to productivity goes further still, as seen in the range of businesses using soft-ware and tech tools developed in
Wellington.”Last month Science and
Innovation Minister Steven Joyce revealed New Zealand’s leading 200 hi-tech companies reached a combined annual revenue of $9.4 billion – up 12% in the space of a year.
The figures come from the annual Technology Investment Network’s TIN 100 report, show-ing that, of all the regions across the country, Wellington’s rev-enue growth came out on top,
increasing 15.3%.“This year’s TIN 100 report
tells an impressive story of inno-vation, growth and exporting success in New Zealand’s tech-nology sector,” Mr Joyce says.
And it’s not just the larger New Zealand tech companies flour-
ishing in Wellington. Custom software development company YouDo’s chief executive Kari Rei-terer says tech start-ups are also finding Wellington a fantastic place to conduct business.
“Wellington is an incredibly easy city to live in,” he says.
“It has a good tech commu-nity and a diverse population with many businesses located in a small CBD. This, together with young people wanting to con-tribute and try new things, makes it a great place for tech start-ups.”
Technology commentator Ian Apperley is optimistic about the future of Wellington’s technology industry.
“We’re talking about an indus-try now worth more than dairy and tourism in terms of GDP.”
He says the local govern-ment has a big part to play in the future of the city’s tech sector and new mayor, Justin Lester will play a large part.
Without a doubt ‘the digital capital of New Zealand’
Onward and upward for national capital’s retail and arts sectors
22 / The National Business ReviewNovember 11, 2016
After years in the doldrums, Wellington’s economy may be reigniting. But if it keeps growing, the city will need better urban planning. Wellington remains a fashion centre with a world-class clothing and retail pedigree and plenty of business leaders hope to grasp new opportunities as the city churns out ideas and spaces.
Special Report
Spotlight on Wellington
How WELLINGTON
GOT ITSGrooveBACK
THERE’S RENEWED CONFIDENCE IN THE CAPITAL AS IT LOOKS AHEAD TO MORE THAN 55,000M2 OF NEW AND REFURBISHED OFFICE SPACE, PLANS FOR A NEW CONVENTION CENTRE AND MOVIE MUSEUM, AND THE FLOW-ON EFFECTS OF A BOOMING TERTIARY EDUCATION SECTOR.
Find out what’s driving Wellington growth, as well as discover Total Property’s gold mine of original commercial news content, market trends and invaluable insights atwww.bayleys.co.nz/totalproperty/articles
Or contact Bayleys specialist Wellington commercial property team on 04 499 6022 Capital Commercial (2013) Ltd, Bayleys, Licensed under the REA Act 2008
There were 3000 jobs created in the tech sector across New Zealand last year:1500 of
those were in Wellington– Justin Lester
Continued on P24
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Kate Robertson
With the science, technology, engineering and mathematics sector (STEM) a major focus for the Wellington economy and a hot point of debate during the recent local body elections, it raises the question: Where do the arts and retail industries Wellington built its reputation on fit into the equation?
Despite their absence from the debate, talk to almost any Wellingtonian and the general consensus seems to be the sector is thriving.
This year has been a big 12 months for the capital. The 2016 Royal Edinburgh Military Tattoo drew Wellington’s biggest ever crowd, selling 82,000 tickets across the four-day season, The New Zealand Festival hosted bigger headliners than ever before, the World of Wearable Art (WoW) continues to light up the city for three weeks every spring, and Lambton Quay is more vibrant now than at any other point in recent history.
For proof of hype around the retail sec-tor one only needs to look at the media coverage it received in comparison to the local body elections to know it was deemed a talking point of national impor-tance. The shutting down of local institu-tion Kirkcaldie & Stains paved the way for Australian department store David Jones and the opening of Topshop saw people camped out down Lambton Quay in a way rarely seen in Wellington. The strip is desir-able again and people are catching on, a status reflected in councillors going as far as to propose the street be converted into a walking mall as soon as 2019.
But it’s not just Lambton Quay that’s flourishing. High-end retail stores can be found dotted along Victoria and Willis Sts, and now Ghuznee St – a street running parallel to Courtenay Place, not tradition-ally known for its retail presence. One big brand to take up residence on the Ghuznee St fringe is luxury New Zealand leather bag and jewellery brand Deadly Ponies and just three months after open-ing it is already “surpassing all expecta-tions.”
Deadly Ponies creative director Liam
Bowden says the team knew going in there was a strong customer base in Wellington “begging” for a showroom. Given the loca-tion, Mr Bowden believes community has a significant role to play that cannot be overlooked. He noted the brand’s typi-cal “High St customer” buys online from Deadly Ponies, whereas in the physical stores the team is “focused on being part of a community,” something it is already seeing returns from. “Ghuznee St has a host of interesting retailers and galler-ies, and is the creative hub of Wellington which aligns perfectly with our values. With events like WoW happening annually, there is always something attracting more
people to live, visit and shop in Welling-ton,” he says.
Running alongside these current suc-cesses in the retail environment are the events bringing people into the city, the events that built the “cultural capital” brand. For Wellington Regional Eco-nomic Development Agency destination and marketing general manager, Adele Fitzpatrick, the demand for such events is only increasing. For a region on a par with Adelaide and Perth, Ms Fitzpatrick is con-vinced Wellington punches well above its weight for ticket sales and cultural attend-ance. Indeed, Wellington has seen tickets to acts selling at a 4% increase year on year at Absolutely Positively venues. In 2017, Ms Fitzpatrick says the agency is looking forward to hosting the Winery Tour (star-ring Bic Runga, Brooke Fraser and Benny Tipene) for the first time at the Basin Reserve – a venue being considered for wider uses than just sport after the success of Robbie Williams’ concert there last year.
The increase in live events has, how-ever, put pressure on a part of the industry falling behind, the lack of venues. In the wake of several years of notable venues fading out – longtime music haunt Bodega being the latest casualty (after the build-ing was sold for development) – local and international acts alike are limited in their options. With Bodega removed from the equation, small to medium sized acts are left only with the often booked San Fran. Further this with the lack of a venue in between the 5655 capacity TSB Arena and 34,500 capacity Westpac Stadium, some major gaps for acts become apparent.
It’s an issue that’s seen the city bypassed
by top-40 heavyweights such as Troye Sivan, Flume, and Ellie Goulding (twice) – and probably by others not even known to be considering the capital. It’s less than ideal but has borne innovation, with smaller venues such as craft beer bars Rogue and Vagabond and Meow becom-ing regular hosts, as well as outdoor ven-ues such as Waitangi Park utilised more frequently throughout the year.
Solution plannedIt’s all solvable and is an issue Wellington mayor Justin Lester isn’t too concerned about. Having now taken on the arts and culture portfolio, the newly elected mayor says there is a larger venue budgeted for in five to seven years, and in the mean-time Wellington City Council will focus on plans to get the earthquake-closed Wel-lington Town Hall and concert chamber “back on track,” along with a number of other community-accessible spaces. Mr Lester sees no reason why Wellington can’t remain New Zealand’s cultural capital and hopes that in three years the city will still have a “flourishing arts sector” that will breed more work for artists and commu-nity spaces alike.
As a city, Wellington is teeming with optimism and ambition. Residents know the city is moving into a period of growth and are wholeheartedly embracing it. With new leadership, a thriving startup industry and a healthy economy, Wellington seems a city worth keeping tabs on. In Mr Lester’s own words, “Wellington is believing in itself, investing in itself, and marking out its own future.”
COMMUNITY BUZZ: The annual Newtown Festival brings together art, music and food
JUSTIN LESTER: The new mayor has big plans for creating community accessible venues
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SPECIAL REPORT: SPOTLIGHT ON WELLINGTON 25The National Business Review / November 11, 2016
Nathan Smith
Wellington Chamber of Com-merce chief executive John Milford referred recently to the capital’s city planning as “lack-ing grunt,” which is especially concerning as resident, visi-tor and business numbers are expected to rise over the next decade.
Data from the annual Infometrics Wellington CBD report shows Wellington’s gross domestic product (GDP) grew by 3.8% in the year to March 2015. Financial and insurance services were the largest con-tribution to overall growth in Wellington’s CBD between 2014 and 2015, growing by 6.2%.
Urban planning and devel-
opment is of paramount impor-tance, says Mr Milford, and the chamber wants to see an urban development agency. Com-mercial construction is also increasing, with non-residential building consents up 25% com-pared with 15% nationally in the September 2015 year.
Front of mindWellington Airport chief execu-tive Steve Sanderson agrees with the focus on improving the city’s infrastructure for the ever-rising 204,000 residents in the front of everyone’s minds.
“There is considerable infra-structure construction hap-pening, such as Transmission Gully, the Auckland motorways and rail, and the Christchurch
rebuild but it is still about yesterday’s demand. There is certainly the need for the wider Wellington region to invest in infrastructure and develop-ments and to be done ahead of the curve, rather than when congestion is upon us,” he says.
The Wellington region is one of the top in the country for tourism, marking more than $2.25 billion spent in the past 12 months, a 6% growth over the same period last year. This reflects global trends, as world air travel is expected to double in the next 15 years. New routes and capacity will boost major developments, Mr Sanderson says.
To deal with those changes, Wellington Airport is upgrad-
ing, adding carparking, a hotel and extending its terminal. It also hopes to build a 300-metre runway extension in a bid to attract long-haul flights from Asia and the US.
“Almost 1600 people a day travelled between Wellington and a long-haul destination over the last 12 months. All of them had to take additional connections and unnecessary extra time on ground to reach their final travel point.
“A joint venture with Wel-
lington City Council to extend Wellington’s runway will allow long-haul airlines to operate to and from central New Zealand, delivering significant visitor growth, business connectiv-ity and more convenient and
affordable long haul services,” Mr Sanderson says.
Bayleys Research national manager Ian Little says more than $2.6 billion of new roading
Mr Lester is young, tech savvy and popular with youth. Mr Apperley says his election is a step forward for Wellington’s technology sector.
Mr Lester tells the National Business Review tech jobs in the city will continue to grow during his tenure as mayor.
“There were 3000 jobs created in the tech sector across New Zealand in the last year; 1500 of those were in Wellington.”
He says Wellington is “without a doubt the digital capital of New Zealand.”
In previous years, especially in the 1990s, Wellington experienced corporate drift, where companies left the city in droves, he says.
But that trend is reversing he says.“Flick Electric is one of the fastest-
growing companies in the country. It had 3000 customers 18 months ago and 15,000 this year.”
Mr Reiterer says technology is inter-esting in the way it can help businesses create something new that wasn’t there before.
“For example peer-to-peer lending
didn’t exist a couple of years ago and now is generating new jobs and opportuni-ties.”
Although the sector is looking optimis-tic, Mr Apperley says it has been a hard slog to get to this point.
“We have had some issues in the past with Wellington where the council hasn’t invested its time and energy into the tech sector,” he says.
He says the council has done some things to help the sector along, including trialling some of the smart city software but “in the grand scheme of things it’s been quite limited.”
He says a big blow was struck when the previous council got rid of the technology portfolio.
“Every local government has differ-ent portfolios the elected officials and councillors manage – economy, tourism, housing. The previous Wellington council dumped the tech portfolio and, at the time, we threw our hands in the air and asked ‘why have you done this?’
“No answer was forthcoming back then.”
But he says some of Mr Lester’s policies will help to support the sector, for exam-ple his plan to get the council to buy more from Wellington tech companies.
“At the moment, the council can buy its tech solutions from anywhere, but what Mr Lester wants is the council to spend at least 20% of that money on local tech companies.”
This will help with the city’s tech growth, he says.
infrastructure will reinvigorate the Wel-lington region’s established industrial precincts and provide the catalyst for expansion of new precincts north of the city.
“To date, development has largely been focused on bulk retail prem-ises servicing a growing surrounding residential catchment. However, longer term, given its proximity to both Kapiti airport and the new motorway, Kapiti Landing has the potential to become a major regional commercial and indus-trial business hub.
“Improved connectivity to Wellington city and other major business precincts within the region means interest from storage and distribution companies in Kapiti Landing is likely to increase, par-ticularly as a base for servicing custom-ers in the lower North Island,” he says.
Lift in activityPeople travel from far and wide to work in Wellington’s CBD each day so, once the Northern Corridor project is com-pleted, peak hour travel times between the airport and Levin may be reduced by 40 minutes, according to the New Zea-land Transport Agency. Other improve-ments are expected to shave 15 minutes off the time between Kapiti and the Hutt Valley, and five to seven minutes between Porirua and the Hutt.
Transport Minister Simon Bridges says the Northern Corridor, one of the government’s seven roads of national significance, will make journeys between Wellington and the lower North Island easier, safer and foster improved
economic growth and productivity.Wellington regional transport com-
mittee deputy chairwoman Fran Wilde says the improved motorway network will provide a much higher degree of resilience for Wellington – and New Zea-land – on a vitally important transport route.
“The current two-lane SH1 is totally unacceptable in terms of capacity, expo-sure to high tides in storms and seismic risk. As well as servicing the capital and being a critical commuter road for the region, it also carries national freight destined for the South Island – yet it still
functions as it did a century ago,” Ms Wilde says.
Mr Little also highlights a lift in indus-trial leasing activity over the past 12 months in Porirua and Tawa area, driv-ing down vacancy rates. A number of infrastructure companies involved in the Transmission Gully project are reported to be searching for space within the area, adding to pressure on an already tight market, with agency estimates put-ting vacancy rates as low as 5-6%.
“Given these market dynamics, cou-
pled with the availability of greenfield development land in locations such as Broken Hill, an increased appetite for development, some of it speculative, is evident,” he says.
Mr Bridges says the Kapiti Express-way and other infrastructure projects are providing boosts to the local economy in peripheral – but still important – ways.
“Over half of the contractors’ spend-ing for suppliers and subcontractors
to date has been with local Kapiti busi-nesses. Nearly 600 people are employed on the project and this doesn’t count the jobs that have been created with suppli-ers and through local businesses.
“The project is kickstarting careers and fostering an enduring skill base for the region through a partnership with Whitireia and Weltec to recruit local graduates.”
Without a doubt ‘the digital capital of New Zealand’
IAN APPERLEY: Optimistic about Wellington’s tech sector, given the new council leadership
24 SPECIAL REPORT: SPOTLIGHT ON WELLINGTON / The National Business ReviewNovember 11, 2016
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Given these market dynamics, coupled with the availability of greenfield development land in locations such as Broken Hill, an increased appetite for development, some of it speculative, is evident
– Bayleys Research national manager Ian Little
Continued on facing page
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UPGRADES: Wellington Airport CEO Steve Sanderson wants to act now, rather than later
CONNECTIVITY: Smoothing out infrastructure
