Big piece of Viaduct for little guys

By Colin Taylor

Smaller developers and businesses are being offered a chance to be part of the continuing redevelopment of the Viaduct Harbour area with the sale of the leasehold interest in a prime 1.66ha block of land in central Auckland.

The land for sale encompasses an entire city block, bounded by Fanshawe, Halsey, Gaunt and Daldy Streets, except for the southwestern portion which is occupied by a Caltex Star Mart service station.

The property has 19 separate titles and is being offered for sale through Bruce Whillans and Jack Downer of Bayleys Real Estate, in 15 separate lots ranging from 433 sq m to 3590 sq m. Tenders close on November 23.

Downer says offers will be considered for individual lots, or a combination of lots, as well as for the site in its entirety.

He says the sites are already attracting strong interest from developers, businesses and investors.

"It's the first real opportunity smaller to medium-sized companies have had to get their hands on land in the Viaduct, because major institutional players and development companies have dominated most of the project activity there to date."

The recently completed Air New Zealand building, developed by Macquarie Goodman, occupies a city block on the Harbour Bridge side of the property for sale.

On the city side are the Vodafone Building and Microsoft Building. The Fanshawe St side of the site overlooks Victoria Park.

The tender involves the lessees' interest in the site which is being put up for sale by Mansons. The lessors' interest is owned by Viaduct Harbour Holdings which bought a significant land holding off the Auckland Harbour Board in the 1990s.

Lessees can develop buildings on their lots which they can occupy themselves, rent out or on-sell to someone else. They pay the lessor an annual ground rent.

Whillans says all but two of the lots for sale have original Auckland Harbour Board leases.

"These are straightforward four-page documents which offer security of tenure through 21-year lease terms which the lessee is able to renew perpetually.

"They also have the advantage of having their ground rent reviewed only on the renewal of the lease, every 21 years. This is in contrast to some other Viaduct leases which have rent reviews as often as every five years."

Two of the lots have their next review in 2022 and another two in 2018, with one of these being a smaller 435sq m site with an annual ground rent of $25,393 per annum.

Mansons originally purchased the site with the intention of completing a large-scale office development.

Director Culum Manson says the decision to sell had been prompted by a large number of unsolicited approaches from parties wanting to buy parts of the site.

"We have also acquired the NZ Post site in Victoria St where we are planning a substantial redevelopment and this will be our main development focus in central Auckland."

The property is currently zoned Western Reclamation Precinct 2 under Auckland City's District Plan, which allows a floor area ratio of 3:1, with a maximum height control of 24m through the site and 30m at the Fanshawe and Halsey St corners.

JCY Architects has prepared several concept development designs for various lots. These include buildings of up to seven levels, with ground-floor retail and office floors above incorporating extensive use of external decks.

Downer says the land is strategically located at the gateway to the Western Reclamation area, which extends north from the property on offer and will be the next main focus of redevelopment in the Viaduct Harbour precinct.

He says that while plans for the area are still to be finalised, it is estimated that more than $100 million of new infrastructure will be injected into the precinct and key elements are likely to include large open spaces and park areas, 2.6km of accessible water's edge, new wharves and ferry terminals and a mix of marine, commercial and residential buildings.

"In less than 10 years, the Viaduct has been transformed from a neglected backwater to one of the prime real estate locations in New Zealand. What is planned for the Western Reclamation will take the area to the next level and be a huge asset for the city."

Whillans says proximity to the waterfront is now an important determinant in the choice of office accommodation and rental levels paid and this has seen the orientation of the CBD swing west along the waterfront.

"The Viaduct offers a very attractive environment for doing business, with its modern low-rise commercial buildings proving increasingly popular with companies traditionally located in the centre of the CBD."

Whillans says the growth of residents and office workers in the area has also increased the client base for service-type businesses and the demand for retail space, with Westpac recently opening a branch in the ground floor of the Microsoft Building.

He says a combination of growing demand and a shortage of development sites are pushing Viaduct land prices up. The last block Bayleys sold in the Viaduct this year went for just over $2500 per sq m.

It was a block of just over 6000sq m, further out on the Western Reclamation with a more restrictive zoning.

Website: viaductlandgrab.co.nz

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