In September, Ockham Residential will break ground on Manaaki, a 210-apartment complex next to Jordan Park in Onehunga.
The self-styled 'urban regenerator' has been plying its trade in the city for 12 years during which time it has completed an average of one medium density housing development a year – across the Auckland suburbs of Mt Eden, Avondale, Mt Albert and Waterview.
But it’s Ockham’s first step into Onehunga and the first in a pipeline of 760 units worth $500 million scheduled to be built over the next three years.
Ockham co-founder Mark Todd said this will roughly double what the firm has built since it broke ground on Mt Eden's Ockham Building in 2009.
During this time it has also grown to 75 staff across architecture, project management, finance, sales and construction.
“We’re vertically integrated which is what’s so unusual about us, and have been since day one – across site selection, conception and detailed design.”
Manaaki, which ignores no creature comforts and comes replete with a swimming pool for residents, also sets the tone for subsequent builds with its blend of 87 Kiwibuild apartments alongside 123 open market units.
Its a similar story at the just completed Kōkihi residence in Waterview, a 95-apartment development built in partnership with Marutūāhu iwi, including 47 Kiwibuild units.
That means first home buyers will be rubbing shoulders with generally older “downsizers” in the same community setting.
Todd, a fifth generation Aucklander who grew up in Mt Wellington, founded the development company alongside former school mate and investment banker Ben Preston in 2009.
Both are staunch advocates for upholding the “building communities” theme, which is reflected in its other ongoing projects, including its 117 apartment Aroha development in Avondale and smaller, 38 unit Aalto build in Morningside.
The village feel is also important, as outside of its Kiwibuild component, Ockham’s biggest client base are Kiwis older than 60, Todd said.
“They may be downsizing but they also want good neighbours and still be close to the action, and to be close to shops, libraries and parks.”
Build to Rent?
Last year, Ockham launched its first purely build to rent (BTR) development, Modal, a 32 apartment in Mt Albert.
The concept is already popular in the US and Europe and is gaining ground in Australia as an avenue for institutions and pension funds to invest in bricks and mortar developments with ongoing rental yields.
In NZ, Ockham is only one of a handful of developers dabbling in BTR, though several are following its lead. These include private equity firm Evans Randall, building 48 apartments in Onehunga. Listed property group Kiwi Property has also applied for consent to build BTR residences at its Sylvia Park and LynnMall complexes.
Modal, in which Ross and Preston have retained ownership, did break the mould in its approach towards “carless” apartment living, one of the first to do so in the city - though there is storage provided for two bikes per apartment.
Like most worldwide BTR developments the aim is to attract long term tenants, though in Modal’s case rental agreements can be signed for as short as one year. Those are at rental rates of between $480 to $650 a week for one or two bedroom units.
While Todd is enthusiastic about his building, he says the jury is still out on the long term benefits of BTR, particularly within the New Zealand context.
Glut of capital
“I think it’s overhyped as an asset class, but it’s a wider discussion for NZ Inc if we need to pursue that as a class given our housing issues.”
In the UK and other markets, large scale BTR was stimulated by a glut of capital needing a home. That Todd said was a result of institutions having low expectations on immediate returns, so it’s an "easy way" to deploy large sums of money.
“So, I’m pretty much on the fence as to whether it’s a customer centric option, or even whether it’s something that suits the Kiwi mindset.”
Todd thinks that mindset is grounded in an awareness that a home is most people’s single most important asset. "Ownership is important and as the value of the asset appreciates over time, the capital rewards are there, and that's what we provide."
Todd is also unashamedly Auckland-centric, catering both to demand and to a need for well-constructed new homes in the country’s fastest expanding city.
As a result, the firm was deeply engaged in Auckland’s unitary plan debate five years ago, particularly as it related to density controls and requirements for parking.
Todd gives himself a pat on the back, noting that it's now optional for townhouse or apartment developments to have carparks. "We shouldn't be designing homes thinking about how to cater for cars, rather we need to build well located homes with good access to transport."
Quality over profits
The focus of the firm remains building high quality multi-unit developments rather than generating profits. However, Todd believes one does not have to be forsaken for the other.
“You can have both. Sure, we have to show a certain level of profitability to attract equity and get funding from banks but we don't lose sight of one of our primary drivers, and that is to lead and to think better. I think we’ve done that from day one.
“Everyone of our buildings sets a new standard in a locale, and we get a huge amount of satisfaction out of that. So we’re really proud of what we’ve built."
But the company still has to jump through a lot of financial hoops. “Every business needs to be profitable, but that’s the lowest possible bar. Of course, we wouldn’t be a business if we weren’t profitable.”
At the same time, thought was needed about what else could be done to help knit together and build a great community.
"There's more to it than just profits and money in any kind of business. That's not what motivates people. Business isn't special per se, we piggyback on social cohesion and society that allows us to operate, so we'd like to change the narrative that business people and entrepreneurs need to be treated differently because they provide the wealth basket."
That drive was also the inspiration for Todd and Preston setting up the Ockham Collective, a registered charity supporting music and the arts.
The collective now sponsors the NZ Book Awards, which Todd said was simply a great way not only to give back to the community, but also open doors commercially.
"It's just a win-win."
